The Federal Government’s 2026-27 Budget dropped two weeks ago on May 14, foreshadowing several changes to Australia's migration systems.

The budget included large reductions in net migration, changes to visa policies,  limited funding into skills assessments, and an overall focus on “Strengthening the Integrity of the Migration System”.

Much of these changes are explained under the Budget’s focus on productivity, with the ultimate goal to reform our migration system to target “better educated, higher-skilled and younger migrants”.

These changes follow the doubling of fees (now $4,600) for temporary graduate visas, which allow recent international students to continue to live, work and study in Australia after they’ve completed educational training.

Changes to Net Overseas Migration

Annual budgets gather data from various government sources to justify and predict their policies and their impacts: migration data is drawn from the Australian Bureau of Statistics. This budget adjusts forecasting slightly upward for this year from the previous budgets’ forecasting, with net overseas migration (NOM) increasing by ~20,000 to a total of 245,000 for 2026-27.

245,000 is aligned with the average NOM maintained between June 2017 and June 2019 (247,640), and just slightly elevated compared to the last NOM measurement taken pre-Covid (June 2019) at 241,340. This budget retains the goal of reducing NOM, despite a return to pre-Covid levels.

Ultimately, “Migration policy changes in this Budget will place downward pressure on NOM.”. Levels are forecast to return to 225,000 in 2027-28, an amount last seen in 2016.

Net Overseas Migration across 2015 to 2025. The mass decline over Covid-19 is seen in the large drop from 2020 to 2022, with a subsequent rapid increase after borders re-opening. Recent levels of migration continue to trend downwards towards pre-Covid levels. Source: Australian Bureau of Statistics, Overseas Migration 2024-25 financial year.

Changes to the Permanent Migration Program Planning Level

The 2026-27 permanent Migration Program planning level in this budget plans for 185,000 migrants in 2026-27 to have a pathway to permanent residency in Australia (across either ‘Skill’ or ‘Family’ streams).

These are similar to 2018-19 levels (190,000). 70% of these migrants (129,590) are already living in Australia, whilst the remaining places “will be predominantly allocated to high-skilled migrants that help address Australia’s long-term skill needs.”

The 2025 Australia Occupation Shortage List found 29% of occupations were experiencing a national shortage (33% in 2024 and 36% in 2023).

Persistent shortages across 2021-2025 include technicians and trade workers (particularly constructive, engineering and automotive trades); various ‘professional’ roles across health, early childhood education and engineering/science and roles in the care sector (care roles and nurses).

Reforms to the Working Holiday Maker program

The Working Holiday Maker program (WHM) “allows young adults to have a 12 month holiday, during which they can undertake short-term work and study” in Australia. The budget establishes changes to the program to “better control numbers, reduce barriers to work, provide a fairer allocation … and support Australia’s national interests.”

The program is designed for people 18-30/35 (passport-dependent), without dependents, and costs $670 per application. Existent since 1975, the rationale behind the WHM is to continue “fostering stronger links between young people from Australia and around the world”, as stated by the Department of Home Affairs (HA).

There are two visa subclasses within the WHM, one with uncapped annual numbers (‘Working Holiday (subclass 417) visa’) and one with capped numbers for specific countries (‘Work and Holiday (subclass 462) visa’). The difference between your subclass is dependent on your passport (a full list as of 2025 is available on page 5 of the WHM program report).

Currently, 20 of the 50 WHM-eligible countries are uncapped. The budget’s aim to “better control numbers” will not affect hard and soft limits for this year, but HA could not confirm what future changes might be when spoken with on budget day.

The “fairer allocation of WHM visas” in the measure largely refers to increasing the use of ballots to allocate within countries individual caps. At present, passport holders from China, India and Vietnam participate in a “visa pre-application process”, or a ballot, where they are randomly selected to apply for a subclass 462 visa.

Better Recognition of Migrant Skills

Prioritising higher skilled migrants has necessitated improvements to the Department of Employment and Workplace Relations, who convert international licensing and education to Australian qualifications. The initiative aims to support “faster, more flexible skills assessments” through $85.2 million over four years from 2026–27.

Primarily, the budget provides funding for a new, modern skills assessment system “for Trades Recognition Australia (TRA) to facilitate the integration of occupational licensing” (needed for workers such as electricians and plumbers).

Alongside occupational licensing, the TRA will provide $5.6 million over three years (from 2026-27) for a new program of skills assessments for onshore visa holders to help gain employment and meet worker shortages.

Both of these expect to “be fully recovered over the medium term” (a seven-year period), either through existing (occupational licensing) or new (onshore assessments) charges.

$4.5 million is allocated over four years (from 2026-27) to strengthen the oversight of Assessing Authorities, including requiring an annual performance report from each authority from next year. Assessing Authorities consider whether a skilled visa applicant holds the necessary skills for their specific skilled occupation.

This budget measure outlines that “The Department of Employment and Workplace Relations will also consult on requirements for a skills migration commissioner, with costs to be met from within existing resources.” Overall funding for the Employment and Workplace Relations portfolio this year is comparable to the funding for estimated actual costs for 2025-26, reduced by 2.7% (~$186.8mil).

Reforms to the Permanent Migration Points Test

Almost two-thirds of permanent skilled migrants are selected through points-tested visas. Five subclasses of Australian visas use the ‘permanent migration points test’ to award places amongst applicants.

Currently, points are awarded across different categories, including areas such as age, English language skills, skilled employment experience (both inside and outside Australia), educational qualifications, and partner skills. The points system will be “optimised to select better educated, higher-skilled and younger migrants”. What this exactly entails has not yet been announced.

The following visas are impacted by changes to the permanent migration points test:

Business Innovation and Investment (Provisional) visa (subclass 188): “This visa allows you to own and manage a business in Australia, conduct business and investment activity in Australia or undertake an entrepreneurial activity in Australia.” Cost: $10,000.

Skilled Independent visa (subclass 189): “This visa is for invited workers, eligible New Zealand citizens and eligible Hong Kong or British National (Overseas) passport holders with skills we need, to live and work permanently anywhere in Australia.” Cost: $4,910.

Skilled Nominated visa (subclass 190): “This visa lets nominated skilled workers live and work in Australia as permanent residents.” Cost: $4,910.00

Skilled Regional (Provisional) visa (subclass 489): “This is a temporary visa. It is for skilled workers who want to live and work in regional Australia.” Cost: $435.00-$4,910.00.

Skilled Work Regional (Provisional) visa (subclass 491): “A visa for skilled people nominated by a state or territory government to live and work in regional Australia.” Cost: $4,910.00

Image Source: Felicity Bayne