On Tuesday 12 May 2026, Treasurer Jim Chalmers MP released the Federal Budget to the public, describing it in his accompanying speech as “the most important and ambitious budget in decades”. Broadly, the Federal Government is set to spend $833.2 billion this financial year (an increase of $47.5 billion), with measures aimed at addressing inflation, economic growth, social services, cost-of-living pressures, and housing.
While immigration remained a significant focus, the Budget did not introduce sweeping structural changes overnight. It did, however, confirm a number of important policy directions likely to shape the migration landscape over the coming financial year. Below are some of the key developments likely to impact the immigration space and our clients:
Planning Levels
The Government has confirmed that the permanent Migration Program planning level for 2026–27 will remain capped at 185,000 places, consistent with the current program year. More than 70% of these places will be allocated to the skilled visa streams, reinforcing the Government’s ongoing focus on addressing workforce shortages and supporting economic productivity through skilled migration.
- WHAT DOES THIS MEAN FOR CLIENTS? Applicants applying for general skilled migration or employer sponsored/nominated visas will continue to have the greatest breadth of opportunity in the coming migration year. If you are in Australia on a temporary work visa, now is the time to look into your skilled and employer nominated options.
Skilled Migration Points Test Overhaul
The Budget highlighted the Government’s intention to overhaul the skilled migration points test, an idea that was floated a while ago, when the Migration Strategy was released. While the specific details and supporting legislation have yet to be released, it has been indicated that the test will be ‘optimised’ so as to place greater emphasis on younger, highly skilled, and highly educated migrants, particularly where such attributes align with workforce shortages in the Australian labour market.
- WHAT DOES THIS MEAN FOR CLIENTS? As the skilled points test applies to a significant proportion of all permanent skilled migrants, the proposed overhaul will have a significant impact. Once details have been released, it will be time to reevaluate your CV, and to consider what (if anything) you can do to improve your prospects of meeting the revised test. The new Points Test is intended to focus on younger, higher calibre prospective migrants, which will further increase reliance on employer-sponsored pathways such as the subclass 482 Skills in Demand visa or the subclass 186 Employer Nomination Scheme pathway.
Onshore Prioritisation
Another key takeaway from the Budget was the Government’s growing preference for onshore applications in both the skilled and family visa streams. It has been indicated that increasing priority will be given to applicants already living in Australia, with a substantial proportion of permanent visa places expected to be allocated to onshore applicants transitioning from temporary visas. Offshore places are expected to be concentrated among highly skilled migrants, with approximately 55,100 places allocated to offshore applicants and 300 places reserved for the Special Eligibility stream.
- WHAT DOES THIS MEAN FOR CLIENTS? Being in Australia at the time of application will be advantageous, as temporary visa holders already living in Australia will be prioritised for permanent migration opportunities. This should also hopefully mean fewer Bridging visa B (allowing for overseas travel) applications for applicants, and less anxiety about changes in circumstances while your application is processing. If you’re offshore, the pool has just gotten considerably smaller. Consider whether you have the ability to get to Australia before submitting an EOI – again, the subclass 482 Skills in Demand pathway, for example, may be worth exploring as a first step.
Overseas Qualifications Recognition
The Budget also included funding aimed at improving the recognition of overseas qualifications and accelerating skills assessments for migrant workers, particularly in trade occupations. The Government has allocated $85.2 million over the next four years to streamline skills assessment and occupational licensing processes, with a focus on reducing delays for workers in sectors experiencing persistent shortages, including construction and infrastructure. The Government has also indicated that it will seek to accelerate recognition processes for overseas qualifications.
- WHAT DOES THIS MEAN FOR CLIENTS? Speeding up skills assessments means prospective applicants can apply for visas or submit EOIs sooner. With some skills assessments taking 3 – 6 months, compounding delays in the program, this is expected to reduce processing times, meaning that skilled workers can be on the ground sooner.
Compliance and Integrity
The Budget also includes funding directed at integrity and compliance measures across the program, including tighter scrutiny of Student visa applications, and improved workplace protections for migrant workers. The Australian Border Force will also receive funding to implement migration law changes under the Combatting Antisemitism, Hate and Extremism Act 2026.
- WHAT DOES THIS MEAN FOR CLIENTS? Student visa applications are already highly scrutinised – this will continue. Increased funding is also likely to mean increased site visits, sanctions and visa cancellations. Employers, now is the time to ensure you are compliant with your sponsorship obligations.
Working Holiday Visas
The Working Holiday Maker program will be reformed, including a greater use of ballots. Ballots are currently only used in certain country programs, but this will now be expanded so as to better manage visa numbers and provide a “fairer allocation”.
- WHAT DOES THIS MEAN FOR CLIENTS? Employers and industries who have traditionally relied on students and working holiday makers for their staffing needs may need to consider the Skills in Demand or other visa programs.
Future Projections
The Government has forecast a continued decline in net overseas migration over the coming years, projecting a decrease to approximately 245,000 in the 2026–27 migration year, down from an estimated 295,000 in 2025–26. This reflects the Government’s ongoing efforts to moderate migration levels following the significant post-pandemic increase in arrivals.
- WHAT DOES THIS MEAN FOR CLIENTS? Although permanent planning levels remain stable, the projected reduction in net overseas migration may assist in easing pressure on processing systems over time.
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While migration settings continue to tighten in some areas, the Budget makes it clear that skilled migration is central to the Government’s economic strategy. Whilst the subclass 482 and subclass 186 pathways appear to have no material changes, faster skills assessment and licensing processes as well as the prioritisation of onshore applications will mean that employer driven pathways will be the top choice for most applicants. This, together with the increased compliance, will mean employers may see an increase in talent, as well as an increase in scrutiny.
The new points test will be one to watch. Given that the program as it stands currently already favours young, educated and experienced migrants, it will be interesting to see what constitutes being “better educated” – for example, do you get bonus points for having studied at Cambridge University? The concept of “younger”, “highly skilled” migrants who are “better educated” comes from a Grattan Institute report from 2024. Their recommendation included the removal of points for studying in Australia or for undertaking a professional year, and the allocation of points for any skilled employment experience. At this stage, though, it seems unquestionable that competition for skilled migration visas will increase, and prospective applicants may be better off considering employer driven pathways.
For further information or tailored guidance on how the measures outlined in the Federal Budget may impact your migration goals, please contact our team to arrange an appointment.
*All information is general information only, as at the date of publication, and should not be interpreted as legal advice. For an accurate and current assessment of your circumstances and visa options, please contact us to receive this advice.
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