A key skilled migrant visa designed to steer workers to regional Australia has been cut by more than 18,000 places, sparking fears country towns and businesses will struggle to attract desperately needed staff.
Budget figures show the Department of Home Affairs’ overall migration intake will remain capped at 185,000 places in 2026-27, the same as the last two years.
The Skilled Migration Program, which sits within this total intake, offers visas through Commonwealth, employer-sponsored, and state and territory pathways.
But within the State and Territory subset, the regional visa category — which requires migrants to live and work in the regions — has been cut by more than half and dropped from 33,000 in 2025-26 to 14,110 in 2026-27.
Migration Institute of Australia chief executive Peter Van Vliet warned the move could leave some regional employers struggling to fill critical workforce gaps.
“Particularly those smaller businesses in regional Australia, will find it harder to attract people,” he told NewsWire.
“We know that migrants are attracted to the big cities with the big jobs, which is important, but equally we know that means regions miss out.
“And this visa, including the 491 and 494 subclasses that sit behind those numbers, is specifically designed to ensure that migrant workers stay in regional Australia.
“There’s an incentive for them to stay for three years if they want to get permanent residents.
“None of the other visa programs have that incentive.”
Mr van Vliet said the impact on regional Australia would essentially “halve the workforce supply available to them”.
“It’s not a great outcome,” he added.
But University of Sydney Associate Professor Anna Boucher, who sits on the federal government’s skilled migration subcommittee that advises Home Affairs, argued the reshuffling of the 18,890 places could still be used for regional labour demand.
Dr Boucher pointed to findings from the federal government’s review of regional migration settings that outlined migrants on regional visas were sometimes “less skilled”.
“There have been concerns about them taking on jobs which are below the skill level that they should be employed at, which, when that happens, it raises risks like competition with domestic workers,” she said.
“So, what I think they’re trying to do here, we can see the numbers have been made up predominantly in the employer program, and also in the state territory nominated.”
Budget figures show the allocation for employer-sponsored visas increased by 14,040 from 2025-26 to 2026-27. For the state and territory nominated category, which sits under the same pathway as regional, places increased by 2,500.
“So, potentially, employers in regions could still bring in workers regional areas by sponsoring them,” she said.
“Either if they’re state or territory government sponsors who are bringing workers into regions, a classic example would be nurses or doctors, or if they’re non-government employers wanting to sponsor workers.
“So that’s what I think is probably how regional employers will get workers in rather than through the regional program.”
Immigration has become a key flashpoint amid Australia’s housing crisis, with Opposition Leader Angus Taylor proposing measures in his budget reply speech that would tie net overseas migration to housing completion.
The Liberal leader’s focus on immigration is widely seen as an attempt to fend off the threat of an emboldened One Nation, which recently won its first federal contest by clinching the formerly blue-ribbon seat of Farrer.
This win has sparked fears One Nation could cannibalise the Liberals’ and Nationals’ chokehold on the conservative vote, especially in parts of regional Australia.
