Australia’s federal government plans to reduce its annual migrant intake have raised concerns among industry groups about worsening labour shortages and potential economic impacts. The proposed cuts aim to lower the net migration figure from around 300,000 in the current year to 245,000 by mid-2027, and further to 225,000 in the following year.
The government’s move seeks to alleviate pressures on housing and infrastructure amid changing household demographics, according to Home Affairs Minister Tony Burke. “We need to get some breathing space” for infrastructure and housing, Burke said, while acknowledging the need to balance economic growth with social service demands.
Businesses that rely heavily on migrant workers are warning that the planned restrictions could deepen workforce challenges, especially in sectors such as hospitality, tourism, agriculture, health, and construction. Kahlia Colquhoun, owner of Cape York Camping, a holiday park and restaurant in northern Australia, noted that about 80 percent of her 32-person staff consists of short-term foreign workers. She said the changes could force her business to reduce operating hours or impose longer minimum stays to cope with staffing shortages.
Industry representatives echoed similar concerns. John Hart, head of the Restaurant & Catering Association, said tighter migrant numbers could severely impact the ability of food service businesses to maintain operating hours and seating capacity, warning that local labour supply is insufficient for industry growth. Wes Lambert, leading the Australian Restaurant & Cafe Association, highlighted that the sector currently has around 60,000 job vacancies, which could spike to 200,000 if migration limits tighten, potentially driving wage inflation and higher prices.
Agricultural groups also expressed caution. Michael Coote, representing vegetable growers through AUSVEG, emphasized the role of working holidaymakers in filling seasonal harvesting roles. The Australian Tourism Export Council noted the importance of working holidaymakers not only as a seasonal workforce but also for their contribution to tourism spending.
Under the migration reforms, international student visas will be limited, though exceptions will be made for applicants from Pacific and Southeast Asian countries including Singapore. Working holidaymaker visas will also be curtailed—from 57,000 extended second-year visas down to 45,000, and from 31,000 third-year extensions down to 5,000 annually. The number of skilled migrant visas, estimated at roughly 270,000 for 2025, is expected to remain unchanged.
The migration cuts come as political debate intensifies ahead of the 2028 federal election. The opposition Liberal-National Coalition proposes more drastic reductions, aiming for 100,000 migrants annually by 2029-30 before a modest increase. Meanwhile, the One Nation party advocates for net negative migration in its initial years if it gains power.
Economists and business leaders caution that reducing migration could have broader fiscal consequences. Economist Saul Eskola highlighted that migrants tend to be net contributors to public finances by paying taxes and drawing less on social services, suggesting that lower immigration might increase national debt. Bran Black, head of the Business Council of Australia, emphasized the need for coordinated efforts to train domestic workers while maintaining migration to fill critical skill gaps to support economic strength.
As Australia reconsiders its migration policy, balancing population growth, labour market demands, and social infrastructure remains a complex challenge for policymakers.