Sydney - On Monday, Australia announced plans to tighten visa regulations for international students and low-skilled workers, potentially reducing its migrant intake by half over the next two years in an effort to revamp what it deems a "broken" migration system.

The new policies stipulate that international students must achieve higher scores on English tests, and there will be increased scrutiny on second visa applications, extending their stay. Home Affairs Minister Clare O'Neil emphasized that the strategy aims to restore migration numbers to normal, addressing concerns about the current state of migration and its impact on the country's future.

Prime Minister Anthony Albanese echoed these sentiments, stating that Australia's migration levels needed to be scaled back to a "sustainable level" due to perceived flaws in the existing system.

O'Neil highlighted that targeted reforms were already reducing net overseas migration, contributing to the anticipated decline in migrant numbers. This decision follows a peak in net immigration at a record 510,000 in 2022-23, with forecasts indicating a decrease to approximately a quarter of a million in 2024-25 and 2025-26, aligning with pre-COVID levels.

The surge in net overseas migration in 2022-23 was primarily attributed to international students, leading to the government's move to implement reforms. Shares of IDP Education (IEL.AX), a provider of placement and education services for international students, dipped more than 3% in response.

Australia had temporarily increased its annual migration numbers last year to address labor shortages caused by the strict border controls during the COVID-19 pandemic, preventing foreign students and workers from entering for nearly two years. However, the influx of foreign workers and students added pressure to an already tight rental market, contributing to an increase in homelessness.

A survey conducted for the Sydney Morning Herald revealed that 62% of Australian voters believe the country's migration intake is too high.

Given its historically heavy reliance on immigration to meet labor market demands, Australia's Labor government is now focusing on expediting the entry of highly skilled workers and facilitating their path to permanent residency. As part of this effort, a new specialist visa for highly skilled workers will be introduced, featuring a one-week processing time to help businesses attract top-tier migrants in a competitive global landscape.