Federal Budget 2026-27 and what’s actually changing for migration

The 2026–27 Federal Budget has now been released, and you may have heard that the Australian Government has committed to reforms to the permanent skilled migration system, including a new approach to recognition of skills, further compliance funding, and a prioritisation of migrants who are already in Australia to reduce net overseas migration.

So what do the 2026-27 Budget papers say about these key changes, and what do these changes mean for you?

We read the Budget papers so you don’t have to:

1. Permanent Migration Program remains at 185,000 places

The Budget papers confirm that the 2026–27 permanent Migration Program planning level will be maintained at 185,000 places.

This means there has been no increase or decrease to Australia’s permanent migration cap from 2025-26, and the Budget further confirms that out of the 185,000 total permanent places, around 132,240 (over 70%) will be allocated to Skilled visas, with 129,590 allocated to migrants already living in Australia. An additional 300 places have been allocated to the Special Eligibility stream (i.e. for those in special circumstances including permanent residents returning to Australia after being overseas). 55,110 places will be allocated to Skilled migrants outside of Australia, and the balance will be allocated to Family visas.

2. Prioritisation of onshore applicants

The Budget papers confirm that the 2026–27 Migration Program will continue to support a reduction in net overseas migration by prioritising skilled migrants who are already in Australia, with:

• 129,590 out of 132,240 skilled places allocated to migrants already in Australia; and

• 55,110 remaining skilled places allocated predominantly to highly skilled migrants offshore who can help address Australia’s long-term skilled needs, e.g. perhaps tradespersons, healthcare workers and teachers.

This means that if you fall under one of the following cohorts of temporary visa holders in Australia, you may soon benefit from being prioritised for Skilled visas, particularly through the Skilled Independent (Subclass 189) visa, Skilled Nominated (Subclass 190) visa and Skilled Work Regional (Provisional) (Subclass 491) to Permanent Residence (Subclass 191) visa programs:

• Temporary Graduate (Subclass 485) visa holders;

• Skills in Demand (Subclass 482) visa and/or other employer-sponsored workers already onshore; and/or

• other temporary residents already living and working in Australia.

The Budget does not specify how and whether these changes will be effected through to changes to Australian migration legislation. Nonetheless, this could also be operationalised through policy settings such as targeted invitations for the Subclass 189 visa, Subclass 190 visa and Subclass 491 visas focusing on onshore migrants, with invitations to the most competitive offshore migrants being issued for certain prioritised occupations and industries.

3. Skilled migration points test reform officially confirmed

The Budget papers confirm that the Australian Government will reform the permanent migration points test to “better identify migrants who drive productivity and long-term prosperity.”

So how exactly will the points test system be changed? All that has been stated so far is that “[t]he points test will be optimised to select better educated, higher-skilled and younger migrants overall”, which indicates that younger and highly-educated migrants who are working at a higher skill level could be prioritised.

The likely “winners” from the point test reform could be those who have:

• more Australian skilled work experience;

• high level of qualifications;

• a younger age profile;

• a skills assessment in a prioritised or in-demand occupation.

Nonetheless, as it presently stands, the Australian Government has not clarified a number of important questions about what the reformed points test might look like, e.g. -

• which existing points factors will be reduced or removed;

• whether Professional Year points will remain;

• whether partner points will change;

• whether Australian study points will change; and

• whether English language points will be adjusted.

4. New funding for skills recognition reforms

The Budget papers confirm that the Australian Government will be investing AUD85.2 million over 4 years from 2025–26 to reform skills assessment and licensing arrangements, including the allocation of:

• AUD75.1 million for Trades Recognition Australia (TRA) to establish a new skills assessment and licensing framework by working with states and territories to pilot streamlined assessment-to-licensing pathways for priority trade occupations such as electricians and plumbers;

• AUD5.6 million for TRA to deliver new skills assessments for onshore migrants to recognise existing qualifications and practical trade experience; and

• AUD4.5 million to strengthen regulatory oversight of skills assessing authorities.

This means that persons in trade occupations (e.g. electricians, plumbers, building & construction workers and other licensed trade occupations in particular) may soon find it easier to obtain a skills assessment, as well as obtain the necessary occupational licensing or registration that they would need to work in that occupation in Australia.

5. Increased migration integrity and compliance funding

The Budget papers confirm that the Australian Government will be investing AUD167.4 million over 4 years from 2025–26 to strengthen migration integrity and border security, allocating additional funding to enforce visa compliance, fraud detection, border integrity and enhanced student visa scrutiny:

• AUD74.2 million for the Federal Court of Australia and Federal Circuit Court and Family Court of Australia (FCFCOA) to address misuse of the Protection visa system by increasing efficiency of the merits and judicial review processes, including through a pre-filing pilot for a duty lawyer legal assistance service in the Sydney and Melbourne FCFCOA registries;

• AUD46.4 million to strengthen systems capability across the migration system;

• AUD27 million to continue information and education activities to improve overseas migrant workers’ awareness of workplace safeguards, protections and compliance measures; and

• AUD19.8 million to enhance scrutiny of onshore and offshore student visa applications, ensuring the integrity of the international student visa system.

This suggests continued scrutiny on:

• Student visa applications from applicants of concern;

• Vexatious Protection visa applications and the associated merits and judicial review applications flowing from the refusal of these Protection visa applications; and

• Document verification and/or fraud detection systems within the Department of Home Affairs.

6. Net Overseas Migration forecasts

The Budget papers confirm the following updated forecasts for net overseas migration, which is expected to stabilise at lower levels in the coming years, particularly with the Australian Government’s intended shift towards prioritising skilled migrants who are already in Australia:

• 2025–26: 295,000

• 2026–27: 245,000

Ultimately this means that highly skilled migrants who are already living and working in Australia may soon have better chances of being invited to apply for a Subclass 189 visa, Subclass 190 visa and/or Subclass 491 visa. In contrast, persons offshore who are hoping to migrate to Australia may find it increasingly difficult to be invited to apply for a Skilled visa, unless they are in a prioritised occupation.

Simply put, while the cap on permanent migration remains unchanged, the Australian Government will be increasingly focused on who is already here, who is already contributing, and who is most likely to deliver long-term economic value to Australia.

It will be interesting to see what the new points test will look like, as this could significantly reshape the skilled migration strategy for those who have already lodged, or are going to lodge an Expression of Interest (EOI) to be considered for the Subclass 189, Subclass 190 and/or Subclass 491 visas.

Need help with working out your immigration options in Australia?

Our immigration lawyers at Inclusive Migration have extensive experience in advising prospective migrants to Australia about their employer-sponsored, skilled migration and family migration options in Australia.

Should you wish to discuss your eligibility for a Skilled Visa in Australia, please do not hesitate to email info@inclusivemigration.com.au, submit an enquiry using the contact form on our website or send us a message on WhatsApp.