Federal Budget 2026–27: What It Means for Australian Immigration

Official Source: https://budget.gov.au/content/documents.htm

The 2026–27 Federal Budget includes several important announcements about Australian immigration, skilled migration, overseas workers, students, working holiday makers and housing.

The Budget was delivered on 12 May 2026, and the main immigration details are in Budget Paper No. 1 and Budget Paper No. 2.

For migrants and visa applicants, the biggest message is clear: Australia is not stopping migration, but the Government is trying to make migration more targeted.

The focus is on skilled workers, people already in Australia, faster recognition of trade skills, and stronger checks in some visa areas.

In this blog, we are going to discuss the main Federal Budget announcements related to Australian migration.

The permanent Migration Program will stay at 185,000 places

The Government has kept the 2026–27 permanent Migration Program planning level at 185,000 places, the same as the 2025–26 financial year.

Of these places, 132,240 will be allocated to the Skill stream. This is more than 70% of the program. The Budget also confirms that the Government will keep an approximate 70% Skilled / 30% Family split.

This means skilled migration remains the main focus of Australia’s permanent migration system.

For skilled visa applicants, this includes visas such as the Skilled Independent 189 visa, State Nominated 190 visa, regional skilled 491 and 494 visas, and some employer sponsored permanent pathways, such as the 186 visa.

More places will be prioritised for people already in Australia

A major point in the Budget is the focus on onshore migrants.

The Government says it will prioritise applications from migrants already living in Australia. Across the Skill and Family streams, 129,590 places will be allocated to migrants already in Australia. The remaining 55,110 offshore places will mainly be allocated to high-skilled migrants who can help with Australia’s long-term skill needs.

This could be positive for people already in Australia on temporary visas, such as student visas, graduate visas, skilled temporary visas, partner visas or bridging visas.

However, this does not mean every onshore applicant will get a visa. Applicants still need to meet the legal requirements for their visa pathway.

Net overseas migration (NOM) is expected to fall

The Budget forecasts that Net Overseas Migration (NOM) is expected to fall over the next few years.

NOM is forecast to be:

Budget Paper No. 1 also says NOM is forecast to remain at 225,000 in 2028–29 and 2029–30.

The Budget says NOM has already declined by around 45% from its peak in 2022–23. However, it is still expected to be higher than previously forecast in 2025–26 and 2026–27. One reason given is that temporary visa holders are leaving Australia at lower rates than in the past. The Budget also says arrivals of New Zealand citizens are expected to remain strong because of Australia’s relatively favourable labour market conditions.

In simple terms, the Government expects migration numbers to fall, but not as quickly as previously expected.

The points test for 189, 190 and 491 visas will be changed

The Government says it will reform the permanent migration points test.

The Budget says the points test will be changed to better identify migrants who drive productivity and Australia’s long-term prosperity. It also says almost two-thirds of permanent skilled migrants are currently selected through points-tested visas.

The points test will be optimised to select migrants who are better educated, higher-skilled and younger overall.

This is very important for people interested in points-tested visas, including:

• Skilled Independent visa subclass 189
• Skilled Nominated visa subclass 190
• Skilled Work Regional visa subclass 491

At this stage, the Budget does not give full details of how or when the points test will change. This means we do not yet know exactly how many points may be given for age, English, education, work experience, Australian study, partner skills, salary or other factors.

For applicants, this means it may be important to review your skilled visa strategy early, especially if you are close to a birthday, finishing a course, waiting for a skills assessment, or deciding whether to lodge an Expression of Interest.

Faster skills recognition and skills assessments for migrant trades workers

The Budget includes $85.2 million over four years to improve the recognition of migrant trade skills.

This funding is intended to deliver faster and more flexible skills assessments and to help accelerate occupational licensing. The Budget says these changes could reduce the time taken to enter the workforce by up to six months and help bring up to 4,000 additional skilled trades workers into the workforce each year.

The funding includes:

• $75.1 million for a new modern skills assessment system for Trades Recognition Australia.
• $5.6 million for a new skills assessment program for onshore visa holders.
• $4.5 million to improve oversight, transparency and accountability of assessing authorities.

The Budget specifically mentions priority trades such as electricians and plumbers.

This could be very important for migrant trades workers who already have overseas qualifications and practical experience but struggle to have those skills recognised in Australia.

Working Holiday Maker visas will be reformed

The Budget also includes changes to the Working Holiday Maker program, which includes the 417 and 462 visas.

The Government says it will reform the program to:

• better control numbers
• reduce barriers to work
• provide a fairer allocation of Working Holiday Maker visas
• support Australia’s national interests

The Budget says this will include expanding the use of ballots or lottery systems in the Working Holiday Maker program. At the moment, only India, China and Vietnam use ballots for the Working Holiday visa, but with the changes, we expect more countries to use ballots as well.

A ballot system usually means applicants register for a chance to apply, rather than everyone being able to apply immediately.

At this stage, the Budget does not provide full details about which countries will be affected.

More funding for migration system integrity

The Government will provide $167.4 million over four years to strengthen the integrity of Australia’s migration system.

This includes funding for courts, system capability, migrant worker education and stronger student visa scrutiny.

The Budget includes:

• $74.2 million to address misuse of the protection visa system by increasing the efficiency of merits and judicial review processes.
• $46.4 million to strengthen systems capability across the migration system.
• $27.0 million for education activities to improve migrant workers’ awareness of workplace safeguards, protections and migration law compliance.
• $19.8 million for enhanced scrutiny of onshore and offshore student visa applications.

This suggests the Government is continuing to focus on visa compliance, student visa integrity, protection visa misuse and workplace exploitation.

For applicants, this means strong evidence and accurate applications are likely to remain very important.

Student visa applications may face more scrutiny

The Budget specifically includes funding for enhanced scrutiny of both onshore and offshore student visa applications.

This is intended to protect the integrity of the international student visa system.

For student visa applicants, this may mean the Department of Home Affairs continues to look closely at:

• genuine study intentions
• course choice
• financial capacity
• previous immigration history
• links to the home country
• whether the applicant is using a student visa mainly to work or remain in Australia

This means applications should be well prepared and supported by strong documents.

Temporary Graduate visa application charges increased

The Budget confirms that the Government increased the visa application charge for Temporary Graduate visa applicants by 100%, excluding eligible Pacific Island and Timor-Leste applicants, from 1 March 2026.

This is important for international graduates who are planning to apply for the subclass 485 visa.

The Temporary Graduate visa is often used by international students after they complete their studies in Australia. It can provide time to gain work experience, improve English, complete a skills assessment, seek employer sponsorship or prepare for a skilled visa pathway.

Higher visa application charges make planning more important.

Housing, migration and foreign buyers

Housing is a major issue in the Budget, and it is closely linked to the migration debate.

The Government is extending the ban on foreign purchases of established dwellings by two years and three months, until 30 June 2029.

The Budget says this is intended to help more Australians buy homes that would otherwise be bought by foreign investors. Current limited exceptions that support housing supply will continue. General exemptions will also continue for purchases of established dwellings, including for permanent residents and New Zealand citizens.

This is relevant for migrants because many temporary visa holders are treated as foreign persons under Australia’s foreign investment rules. Anyone on a temporary visa should get specific advice before trying to buy property in Australia.

The Government is also reforming negative gearing and capital gains tax concessions. Budget Paper No. 1 says these tax changes are estimated to support an additional 75,000 first home buyers over the decade, and that new builds will be exempt from the changes to support housing supply.

The official Budget tax explainer says that from 1 July 2027, losses related to existing residential investment properties purchased from 7:30pm AEST on 12 May 2026 will generally only be deductible against residential property income, including capital gains.

Negative gearing will be restricted so that only losses from newly built investment properties can be deducted from a person’s income tax. The capital gains tax discount will also change.

National Credit Recognition Framework

The Budget also includes work on a National Credit Recognition Framework.

This will be developed by the Australian Tertiary Education Commission. The aim is to improve the recognition of vocational education and training qualifications, also known as VET qualifications.

In simple terms, this could help some students avoid repeating study they have already completed. University students with relevant VET qualifications may have the length and cost of their study reduced.

This could be useful for migrants and international students who have already completed practical or vocational training.

Pilot program for protection visa matters

The Government will fund a pilot program called Addressing Misuse of the Protection Visa System.

The pilot will provide funding for migration duty lawyers to give pre-filing legal assistance in migration matters before the Federal Circuit and Family Court of Australia.

The aim is to help people make informed and merit-based decisions before filing judicial review applications in protection visa matters.

This is important because protection visa applications and review pathways can be complex. Getting legal advice early may help people better understand whether they have a genuine legal basis to continue their case.

More funding for Australian Border Force and national security

The Budget also includes additional funding for the Australian Border Force.

The Australian Border Force will receive supplementary funding of $270 million in 2026–27.

There is also funding connected to national security, hate-related conduct and migration law. This includes funding for the Department of Home Affairs to implement migration-related parts of new laws dealing with antisemitism, violent extremism and hate in Australian communities.

These measures include new visa refusal and cancellation grounds, as well as character test provisions under the Migration Act.

For migrants and visa holders, this shows that character, conduct and national security considerations remain very important in the Australian visa system.

Protecting migrant workers

The Government will provide $27 million over two years from 2026–27 to extend the Protecting Migrant Workers – Information and Education grants program.

These grants support information and education activities for migrant workers.

The aim is to help migrant workers better understand workplace rights, protections, safeguards and migration law compliance.

This is important because many migrant workers may not fully understand their rights in Australia, especially if they are new to the country, have limited English, or are worried about their visa status.

Community Safety Order Scheme

The Budget also includes funding to help states implement the Commonwealth Community Safety Order Scheme.

This scheme allows the Minister for Immigration and Citizenship to apply to the Supreme Court in the relevant state or territory for supervision or detention orders for certain non-citizens who may pose a risk of harm to the community.

This is a specific and serious area of migration law. It is not relevant to most visa applicants, but it shows the Government is continuing to focus on risk management, detention and community safety in the migration system.

Work Visa Lawyers final thoughts

The 2026–27 Federal Budget shows that immigration remains central to Australia’s economy, workforce and housing debate.

The Government is not simply reducing migration. Instead, it is trying to reshape migration so that it is more focused on skilled workers, productivity, trade shortages, onshore applicants and system integrity.

More details are still needed, especially about the new points test and Working Holiday Maker reforms.

You can also check Chris Johnston’s article, “Is Australia Facing a Mass Migration?”

Work Visa Lawyers will continue to monitor these changes and provide updates as more information becomes available.

If you need any assistance with your migration matter, please book an appointment with one of our immigration lawyers or registered migration agents. Work Visa Lawyers is one of the best migration firms in Australia, assisting visa applicants and businesses for 15 years.

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