Australian Federal Budget 2026-27: How it Impacts Immigration

Jim Chalmers has delivered his fifth federal budget. Focused on resilience and reform, this budget aims to get Australia through the global oil shock and ease cost pressures on Australians while continuing to strengthen the economy, improve the tax system, support housing affordability and maintain a sustainable budget.

At a Glance

As with every budget, the usual issues were addressed with winners and losers across the board.

Taxpayers – There will be an ongoing $250 tax offset for more than 13 million working Australians starting from the 2027-28 financial year. The government will also introduce a $1,000 instant tax deduction for work-related expenses effective in the 2026-27 income year.

Housing Market – Negative gearing will no longer be allowed on Investment properties purchased after the announcement of the budget unless they are new builds. This change combined with changes to Capital Gains Tax is expected to help 75,000 homes change hands from investors to first home buyers.

Health – An extra $25 billion will go towards public hospitals under a new five-year deal. $1.8 billion dollars will also be allocated over five years to keep Urgent Care Clinics up and running long-term.

Disaster Relief – The government has allocated $2.5 billion over five years to fund recovery from natural disasters. A further $6 million will be spent on developing a national high speed emergency messaging service known as AusAlert. The national aerial firefighting fleet will also be strengthened.

Fuel Supply – More than $10 billion dollars will be spent on strengthening Australia’s fuel security. Funds will also be allocated to help refiners and importers purchase extra stock. An additional $3.2 billion will also be spent on establishing a government-owned fuel reserve.

What This Budget Means for Immigration

As usual, migration was a focus of this budget. So, what’s happening in migration?

Permanent Migration

Permanent migration planning levels remain unchanged at 185,000 places. While this level remains the same as the last three years, there is a shift towards prioritising onshore applicants. 129,390 places (approx. 70%) will be allocated to migrants already living in Australia. The remaining 55,110 place are expected to be allocated to highly skilled migrants with the intention of supporting Australia’s long-term workforce needs.

Net Overseas Migration

The net overseas migration (NOM) figure for 2026-27 has been forecast to drop to 245,000 with a further decline to 225,000 in 2027-28. The Government is hoping to place downward press on net overseas migration over the coming years.

Points Test

The points test will be refined to select younger, higher-skilled applicants and individuals with stronger educational backgrounds. Details of how the points test will be reformed have not yet been released.

English Language

The Adult Migrant English Program will be reformed to improve access to ‘formal English tuition’. A new English language program will be rolled out from 2029 offering flexible tuition and student support to improve English language skills as well as employment and social cohesion outcomes for migrants. These programs will be available to people considered to be most in need of support with English lessons.

Recognition of Qualifications, Skills and Skills Assessments

The government will spend $852 million to deliver faster skills assessments for migrant trades workers and to accelerate occupational licensing. This could reduce the time taken to enter the workforce by up to six months – facilitating up to an additional 4,000 skilled trades workers into the workforce each year.

Working Holiday Maker Visas

The Working Holiday Maker visa program will be reformed. The proposed changes will see a ballot system be expanded to better manage the program and ensure a fairer allocation that supports Australia’s national interests.

Protecting Migrant Workers – Information and Education Program Extension

The Government will invest $27 million over two years from 2026–27 to continue the Protecting Migrant Workers – Information and Education grants program. The funding will support targeted education initiatives aimed at helping migrant workers access accurate information about workplace rights, protections, safeguards and compliance obligations.

Extended Ban on Foreign Purchases

The temporary ban of foreign purchases of established residential dwellings has been extended. The ban was due to expire on 1 April 2017 but has now been extended to 30 June 2029.

This federal budget will affect all Australians in different ways, but cost of living relief is at the forefront of everyone’s mind. How Australians feel about this budget will be greatly tied to how much immediate and tangible relief they will see when it comes to easing cost of living pressures.

We’re likely to see a slower period of immigration as the Labor government quietly continues the status quo of minimal changes and slower approvals. Processing times are already extremely inflated compared to this time last year, with some people waiting over 18 months for permanent visas.

The maintenance of the permanent migration planning level is welcome, as a reduction in skilled workers would likely mean projects such as the upcoming Olympics in Brisbane 2032 find themselves short of skilled trades, engineers, and other critical occupations required to ensure infrastructure is up to the task of such a massive event.

Other changes have been made prior to the budget such as changes to the training visa program in order to ensure that the visa system is not being abused by people onshore. If the additional funding does prove to be effective in speeding up the process of skills assessments it could remove a significant headache from the lives of future visa applicants.

Housing is still at the forefront of discussion but is unlikely to be fixed by a sudden drastic reduction in immigration. There are systemic issues which need to be addressed in conjunction with the migration planning levels and NOM numbers and cannot be solved overnight.

To learn more about any aspect of migration, speak to the team of registered migration agents at Visa Solutions Australia.