Australia's migration system remains one of the most important drivers of economic growth, workforce development and business competitiveness. However, recent public debate has frequently linked migration levels to housing affordability, infrastructure pressures and population growth. According to the Committee for Economic Development of Australia (CEDA), the data tells a more nuanced story. CEDA’s latest report, The State of Migration in Australia, highlights that Australia's post-pandemic migration surge is already moderating, while skilled migration continues to play a critical role in addressing labour shortages and supporting economic productivity.

Migration in Australia is falling faster than many realise

Following the reopening of Australia's borders after the COVID-19 pandemic, Net Overseas Migration (NOM) reached a record high of 555,800 in September 2023. This increase was driven by pent-up demand for international travel, workforce shortages and government policies designed to support economic recovery. However, CEDA notes that migration levels have now been declining for several consecutive quarters. NOM has fallen by more than 250,000 from its peak and is forecast to return to approximately 225,000 by 2027-28, bringing migration closer to historical norms. This trend challenges the perception that migration continues to grow unchecked and reinforces the importance of using current migration data when assessing Australia's population and economic outlook.

Why Skilled Migration remains critical for Australian employers

While migration numbers are easing, Australia's demand for skilled workers remains strong. The CEDA report highlights the significant contribution migrants make across key sectors including:

• Healthcare and social assistance
• Aged care
• Professional services
• Manufacturing
• Logistics and supply chain operations

Nearly one in five migrants works in healthcare and social assistance, helping Australia address growing workforce shortages associated with an ageing population. CEDA estimates that the aged care sector alone will require hundreds of thousands of additional workers by 2050. For Australian businesses, access to global talent through employer-sponsored visas and skilled migration pathways remains essential for filling critical skills gaps, supporting growth and maintaining productivity.

Australia's Migration Program remains focused on skills

The report also confirms that Australia's permanent migration program remains strongly focused on skilled migration. The 2026-27 Migration Program maintains 185,000 permanent places, with approximately 70 per cent allocated to skilled migration and 30 per cent to family migration. Many of these visas are expected to be granted to individuals already living and working in Australia on temporary visas, reflecting the government's increasing focus on onshore migration pathways. At the same time, additional migration integrity measures and visa compliance initiatives continue to be introduced to strengthen Australia's migration framework and ensure that skilled migration aligns with long-term workforce needs.

Key takeaways for Employers

For employers navigating ongoing talent shortages, the report reinforces several important themes:

• Skilled migration remains a core workforce solution.
• Migration levels are declining and are forecast to continue trending downward.
• Access to overseas talent continues to support business growth and economic resilience.
• Australia's migration program remains focused on attracting skilled workers who address genuine labour market needs.
• Strong compliance and visa integrity measures are becoming increasingly important for employers sponsoring overseas workers.

The bottom line

The latest CEDA migration report provides valuable insight into the changing landscape of Australian migration policy. While migration remains a politically sensitive topic, the evidence shows that migration is already moderating, skilled migrants continue to make a significant economic contribution, and employer access to global talent will remain critical to Australia's future prosperity. For employers, HR leaders and global mobility professionals, the focus should not simply be on migration numbers, but on how Australia's migration system can continue to support workforce planning, productivity growth and long-term economic success.

When Australia replaced the Temporary Skill Shortage visa with the Skills in Demand framework, the ambition was clear. This was never meant to be just a rebadging exercise. The idea was to push employer-sponsored temporary migration further up the skills and salary curve, and to respond to criticism that has followed the program for years: that temporary migration can ease labour shortages without doing much to lift wages or build workforce capability at home. On the early evidence, the policy is starting to change the composition, and the cost, of employer-sponsored temporary migration. What has not yet changed is how heavily the economy still leans on it to fill persistent skills gaps.Demand remains strong but uneven

Visa lodgements increased by 7% between July and December 2025, with temporary visas driving much of this growth (+8%). However, this trend is not universal. Student visa lodgements have declined, suggesting early impacts from tightening settings and a stronger integrity focus in the international education sector.

At the same time, December 2025 recorded the highest monthly lodgement volumes since 2019, underscoring that underlying demand for mobility into Australia remains robust.

A sharper program, but not a different one

The strongest case for the new SID regime is that it is clearly more selective. The 2025 Skills in Demand report released by Jobs and Skills Australia in May 2026 indicates that SID visas granted under the program are concentrated in higher-skill occupational groups, while indexed income thresholds have pushed nominated salaries upwards relative to the former TSS settings. That is a meaningful shift. For some time now, a key policy question has been whether employer-sponsored temporary migration is being used to fill genuine skilled shortages or simply to give employers a more flexible labour supply. A higher salary floor does not answer that question on its own, but it is one of the few tools government has to draw the line more credibly.

At the same time, the early data suggests the reform is more incremental than transformative. More than 90% of SID visa grants remain in occupations that were already eligible under the previous TSS visa program. That points not to a wholesale redesign of Australia’s employer-sponsored temporary migration settings, but to a more disciplined version of the model already in place and still serving many of the same labour market needs.

The salary floor may be the most consequential reform

If there is a defining feature of the early Skills in Demand model, it is the renewed importance of salary. Jobs and Skills Australia reports that the SID visa’s indexed thresholds have had a marked effect on nominated wages, reinforcing the view that income settings are no longer a technical threshold but a substantive policy instrument. In practical terms, that means employer-sponsored temporary migration is becoming both more expensive and more clearly targeted at roles that can sustain higher remuneration.

That shift matters well beyond migration settings. At a time when wage growth, productivity and labour market participation remain central economic concerns, salary thresholds are one of the clearest signals the government can send that sponsored migration is intended to complement, rather than dilute, local labour market settings. In practice, that means sponsorship is less likely to be treated as an easy hiring fix and more likely to sit within broader workforce and cost planning.

What higher thresholds do not do, however, is extinguish demand. They change the economics of sponsorship, but not necessarily the logic behind it.

Continued strong demand for temporary skilled migration

What also comes through clearly in the data is that employer demand has not fallen away. Visa grants remain high across both the old TSS program and the new Skills in Demand framework, which reflects a labour market still leaning heavily on migration to meet workforce needs. Strong growth in sectors like accommodation and food services, public administration and support services suggests that even a tighter and more expensive system has not done much to reduce that demand.

The almost 180 per cent jump in SID visa grants for chefs is a good illustration of the point. It shows how much temporary skilled migration still responds to long-running shortages in established sectors, not only to specialist or high-end technical roles. There is nothing inherently problematic about that. But it does bring the key policy question into clearer view: are we building a genuinely strategic skilled migration system, or is migration still doing too much of the work in parts of the labour market where the shortages are anything but new?

Labour agreements are becoming a bigger part of the story

Another notable development is the growing use of Labour Agreements. That tells us the standard SID settings are not always enough to meet employer demand, particularly in lower-paid or occupation-specific parts of the market. That may be a sensible kind of flexibility. But it also shows how the system is becoming more segmented, with tailored pathways carrying more of the weight when the main framework is too rigid. The risk in that approach is not merely administrative complexity. It is that a growing reliance on exceptions can mask deeper questions about whether the mainstream settings are properly calibrated to the labour market they are supposed to govern.

Migration reform will mean little without workforce reform

This is where the discussion becomes more important. Jobs and Skills Australia notes that in some high-volume occupations, migration demand does not neatly align with vacancy data. That matters because it suggests the issue is not simply whether employers want continued access to sponsored workers, but whether we are investing seriously enough in training, retention and participation to reduce repeated dependence on temporary migration. Without that, migration policy risks becoming a substitute for workforce strategy rather than a complement to it.

The early signs suggest the Skills in Demand visa is beginning to do what it was intended to do: lift the salary floor, direct sponsorship more firmly towards higher-skilled roles and bring greater discipline to the employer-sponsored system. But it is also bringing a more difficult reality into focus. Australia is trying to build a more selective, higher-wage migration framework while still relying heavily on sponsored workers in parts of the economy that have struggled for years to develop a stable domestic workforce.

That is why the success of the Skills in Demand visa should be measured by more than grant volumes or processing times. The more telling test is whether it helps move Australia towards a labour market in which migration continues to play an important economic role, without standing in for the deeper workforce planning and investment the economy still requires.

Australia’s migration program is entering a period of sustained pressure and recalibration, with new data from the second half of FY2025–26 highlighting a system balancing rising demand, growing backlogs, and an increasingly firm policy stance on program integrity.

Demand remains strong but uneven

Visa lodgements increased by 7% between July and December 2025, with temporary visas driving much of this growth (+8%). However, this trend is not universal. Student visa lodgements have declined, suggesting early impacts from tightening settings and a stronger integrity focus in the international education sector.

At the same time, December 2025 recorded the highest monthly lodgement volumes since 2019, underscoring that underlying demand for mobility into Australia remains robust.

Backlogs continue to build

Processing pressures are becoming more acute across several key visa categories:

• Employer Nomination Scheme (ENS) applications have surged, with a 34% increase in lodgements and approximately 75,000 applications now on hand. Median processing times have reached 14 months.
• Temporary partner visas (105,000 on hand) and child visas (now exceeding 20 months processing) reflect ongoing strain in family migration.
• Humanitarian pathways, particularly the offshore Afghan program, remain significantly oversubscribed, with over 280,000 applications awaiting processing.

These figures point to a system where demand is outpacing decision making capacity in several streams.

Skilled migration is evolving rapidly

The new Skills in Demand (SID) visa is scaling quickly, with more than 183,000 applications lodged since its introduction in December 2024. While the Core Skills stream dominates (76%), there are clear signs the program is still maturing:

• Processing priorities are currently limited to the Specialist Skills stream
• Policy settings remain under active consideration, including the potential introduction of a Ministerial Direction and stricter time of application requirements (e.g. skills requirements and English)

Importantly, legacy Temporary Skill Shortage applications remain in the pipeline, adding further complexity to processing workflows.

Integrity is driving policy and processing

A clear theme across the system is a sharpened focus on integrity—particularly in student and training visa pathways.

The significant increase (591%) in Training subclass 407 review applications has prompted the Administrative Review Tribunal to create a dedicated case Graduate and Training visa list, while the Department has reinforced that Training visas must not be used to facilitate ongoing employment in Australia.

Similarly, around 20% of Protection Visa applicants are now originating from Student visa cohorts, further reinforcing the government’s focus on tightening settings at the front end of the program.

Operational challenges persist

While the Department has taken steps to improve performance, including retraining over 240 decision makers, operational issues remain. Bridging visa auto grant failures, largely linked to data mismatches, and ongoing backlogs in certain visa subclasses continue to impact processing efficiency.

Encouragingly, targeted resourcing and system improvements are underway, which may lead to more consistent decision making in the months ahead.

A more disciplined migration framework

From a policy perspective, the government’s direction is becoming clearer. There is no intention to reinstate investor visa pathways, and messaging from leadership continues to emphasise that temporary entrants are expected to depart Australia once their visa purpose is complete.

With the permanent migration program accounting for only around 20% of net overseas migration, the focus remains firmly on managing temporary flows more effectively.

What this means for employers and individuals

• Processing times will remain extended in high volume categories (forward planning is critical)
• Program integrity settings are tightening, particularly for student and training pathways
• Skilled migration pathways are evolving, with further policy refinement likely in the near term
• Administrative accuracy matters more than ever, with simple errors (e.g. biodata mismatches) causing avoidable delays

In a high demand, high scrutiny environment, success will increasingly depend on early strategy, strong compliance, and careful navigation of a system still in transition.