Victorian Premier Ben Carroll has publicly challenged the Albanese government’s push to reduce net overseas migration, warning that increasingly aggressive political rhetoric around immigration could damage Victoria’s economy and send the “wrong signals” to prospective international students in India and China.
The intervention exposes a growing divide inside Labor over how far the federal government should go in responding to public concern about migration, housing and infrastructure as One Nation continues to pressure both major parties from the right.
Carroll said Victoria depended heavily on migration, international education and migrant-run businesses, arguing that an indiscriminate reduction in arrivals could produce a “real chilling effect” on economic growth.
“I believe we have to be very sensitive around this debate, because you see a chilling effect,” Carroll said.
“Our economy here in Victoria, our biggest export is international education.”
He warned that discussion about sharply reducing international student numbers risked signalling to major markets such as India and China that students were no longer welcome.
The concern is particularly significant for Victoria.
Official Victorian Government figures show international education generated $17.9 billion in export revenue in 2025, making it the state’s largest services export, while supporting about 69,000 jobs.
Victoria recorded about 322,000 international enrolments during the year, accounting for 30.5 per cent of international enrolments nationally.
India was Victoria’s largest international student market in 2025, accounting for about 78,400 enrolments, or almost one in four international enrolments in the state.
China was second with approximately 67,100 enrolments.
Together, Indian and Chinese students accounted for almost half of Victoria’s international enrolments, highlighting why Carroll singled out the two countries when warning about the tone of the national immigration debate.
The Victorian Government has been actively attempting to strengthen education links with India.
Its current India strategy identifies India as the state’s largest international student source country and promotes deeper university partnerships, joint qualifications, research links and student mobility between Victoria and India.
Carroll’s intervention comes as the Albanese government works on another overhaul of the migration system aimed at driving net overseas migration lower.
Australia’s net overseas migration reached 301,000 in the year to December 2025, according to the Australian Bureau of Statistics, down 8.9 per cent from a year earlier and more than 45 per cent below the post-pandemic peak.
Australia’s population reached 27.8 million during the same period.
Prime Minister Anthony Albanese has said the government intends to bring net overseas migration down further to around 225,000 by 2027-28.
The figure was initially described in Treasury forecasts, but Albanese has since referred to 225,000 as the government’s destination, saying Australia was “headed to 225,000 in two years’ time”.
The detailed policy required to reach that number is still being finalised.
Home Affairs Minister Tony Burke postponed a National Press Club speech last month in which he had been expected to outline the next stage of migration reform.
Measures reportedly considered by the government include tightening some family visa arrangements, limiting the capacity of working holiday makers to extend their stays and changing the treatment of unsuccessful asylum seekers.
Burke has already shifted skilled visa processing priorities towards migrants who are currently in Australia, partly to reduce the number of additional people entering the country.
The government has insisted that migration is already falling and that its approach is targeted rather than indiscriminate.
Burke said in June that student-related net migration had fallen 10 per cent over the year and returned to pre-pandemic levels.
“We are bringing migration down with a sensible, measured approach to provide the skilled workers Australia needs, while addressing exploitation and rorts,” he said.
But migration has become an increasingly difficult political issue for Labor.
The Coalition has pushed for deeper reductions and Opposition Leader Angus Taylor has proposed linking migration levels more closely to new housing supply.
The Coalition has argued net overseas migration should ultimately fall below 170,000, substantially lower than Labor’s planned level.
One Nation has gone further again, campaigning for dramatically lower migration and making population growth, housing pressure and immigration central to its pitch to voters.
The issue has taken on added urgency following a series of polls showing support moving away from Labor and the Coalition towards Pauline Hanson’s party.
Carroll is not the only Labor premier warning Canberra against responding to those political pressures by pursuing increasingly lower migration numbers.
South Australian Premier Peter Malinauskas used a speech in Sydney this week to condemn what he described as a “political race to the bottom”.
“More troubling is the prospect of mainstream politics entering a political race to the bottom for who can cut migration numbers the most,” Malinauskas said.
“This is madness.”
He argued that skilled migration remained crucial for construction, advanced manufacturing, defence projects and other industries facing worker shortages.
The Albanese government has confirmed it has been discussing migration policy with the Coalition as it develops its next package.
Western Australian Premier Roger Cook and major business groups have also warned against arbitrary migration cuts, particularly where industries are unable to recruit enough Australian workers.
Carroll’s position, however, has also exposed a debate within his own Victorian cabinet.
Economic Development Minister Anthony Carbines said increasing population through migration could not by itself be treated as an economic strategy.
“It can’t just be basically just growing our population as a way to just think that that’s somehow going to drive economic prosperity,” Carbines said.
He argued infrastructure and services needed to keep pace with population growth and cautioned against pursuing economic expansion “at all costs”.
Carbines stopped short of saying migration was currently too high, noting immigration levels were ultimately a Commonwealth responsibility.
Victorian Opposition Leader Jess Wilson similarly argued the state’s immediate responsibility was ensuring infrastructure and services could accommodate population growth, rather than setting national migration numbers.
The tension reflects the central economic argument now driving Australia’s migration debate.
Supporters of lower migration say rapid population growth has increased pressure on housing, hospitals, roads, schools and public transport at a time when construction and infrastructure investment have failed to keep pace.
Temporary migration, particularly international students, also became a major contributor to the post-pandemic surge in net overseas migration.
ABS data for the 2024-25 financial year showed net migration of 306,000, with temporary students forming the largest group of migrant arrivals at 157,000.
Critics argue that reducing migration would ease demand in the housing market and give governments time to catch up on infrastructure.
One Nation’s Victorian leader Warren Pickering said relying on continued population growth to keep the economy expanding demonstrated what he described as “fiscal illiteracy”.
He argued Australia needed a more targeted approach that prioritised genuine skill shortages while accounting for pressure on infrastructure and social cohesion.
Carroll, by contrast, argues the economic consequences of cutting too deeply would be particularly severe for Victoria.
International education alone is worth considerably more to the state than tourism or professional consulting services.
Victorian Government data puts international education exports at $17.9 billion in 2025, compared with $6.5 billion for other personal travel and tourism and about $2.2 billion for professional consulting.
The state government also points to international students as a source of workers, future skilled migrants, business connections and long-term links between Victoria and overseas markets.
The economic debate is further complicated by the way international education export figures are calculated.
The $17.9 billion figure includes tuition fees as well as spending by international students on accommodation, food, travel and other services while living in Victoria.
Those economic benefits sit alongside growing public concern about whether governments have adequately planned for population growth.
Australia’s post-pandemic migration surge was extraordinary by historical standards.
Burke has acknowledged that migration peaked at levels that were “too high”, while arguing the numbers have since fallen substantially and that migration must be tailored to Australia’s economic and social needs.
The political question now is how far they should fall.
For Victoria, Carroll’s warning suggests the state government fears the answer could have consequences beyond the headline migration figure.
International students make education decisions months or years in advance and compare Australia with competing destinations including Canada, the United Kingdom, the United States and rapidly expanding European and Asian education markets.
Study Melbourne has itself warned that restrictive visa policies and rising costs in major English-speaking education destinations are already encouraging students to consider alternative countries.
That makes political messaging important.
If Indian students begin to believe Australia is becoming harder to enter, less welcoming or offers fewer opportunities after graduation, Victorian universities and vocational providers could feel the impact before migration numbers formally change.
India’s importance is particularly difficult for Victoria to ignore.
The state recorded more Indian international student enrolments than Chinese enrolments in 2025 and has spent years promoting Melbourne and regional Victoria as education destinations in the Indian market.
Carroll’s warning therefore places him directly at odds with the political momentum in Canberra.
The federal government is under pressure to demonstrate that it is controlling migration.
Victoria, meanwhile, is warning that going too far — or simply allowing the debate to become hostile to migrants and students — could damage one of the state’s most valuable industries.
The argument is unlikely to disappear.
Australia needs more homes and infrastructure. Businesses continue to report skill shortages. Universities depend heavily on international students. Voters increasingly say migration levels are too high. And governments are trying to reconcile all four realities at once.
For Carroll, the immediate message is that reducing migration cannot become an end in itself.
His concern is that in the political rush to respond to One Nation and public anxiety over population growth, Australia risks discouraging the very workers, students and investors Victoria believes it needs.
And with India now Victoria’s largest international student market, the consequences of that debate could be felt not only in Canberra and Melbourne, but thousands of kilometres away among families deciding whether Australia is still the place where they want their children to study.
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