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Australia announced on Monday that it would tighten visa rules for international students and low-skilled workers, potentially halving its migrant intake over the next two years, as the government seeks to reform a “broken” migration system.

Under the new policies, international students would need to score higher on English tests, and a student’s second visa application to extend their stay would be scrutinized more closely.

“Our strategy will bring migration numbers back to normal,” Home Affairs Minister Clare O’Neil said during a media briefing.

“But it’s not just about numbers. It’s not just about this moment and the experience of migration our country is having at this time. This is about Australia’s future.”

Over the weekend, Prime Minister Anthony Albanese stated that Australia’s migration numbers must be reduced to a “sustainable level,” adding that “the system is broken.”

According to O’Neil, the government’s targeted reforms are already putting downward pressure on net overseas migration and will contribute further to the expected drop in migrant numbers.

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The decision comes after net immigration was predicted to reach a record high of 510,000 in 2022–23. According to official data, it was expected to drop to around a quarter of a million in 2024–25 and 2025–26, roughly in line with pre-COVID levels.

According to O’Neil, the increase in net overseas migration in 2022–23 will be primarily driven by international students.

In afternoon trade, shares of IDP Education (IEL.AX), which provides placement and education services to international students, were down more than 3%.

Last year, Australia increased its annual migration numbers to help businesses recruit staff to fill shortages caused by the COVID-19 pandemic, which imposed strict border controls and kept foreign students and workers out for nearly two years.

However, the sudden influx of foreign workers and students has exacerbated pressure on the country’s already tight rental market, with homelessness on the rise.

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According to a survey conducted for the Sydney Morning Herald newspaper on Monday, 62% of Australian voters believe the country’s migration intake is excessive.

Long reliant on immigration to supply one of the world’s tightest labor markets, Australia’s Labor government has pushed to expedite the entry of highly skilled workers and make the path to permanent residency easier.

A new specialist visa for highly skilled workers will be established, with a one-week processing time, to assist businesses in recruiting top migrants in the face of tough competition from other developed economies.

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