Of the 185,000 places allocated for permanent migrants, more than 70 per cent of those will be skilled workers.
Migrants already in Australia will also make up more than two-thirds of those allowed to stay, with the offshore applicants having to jostle for the remaining 55,000 visas dedicated to high-skilled individuals.
The measure will place downward pressure on net overseas migration, according to 2026/27 budget documents released on Tuesday night.
Most permanent skilled migrants are examined by a points test to determine their likely contribution to Australian society.Â
That test will be optimised to "select better educated, highly-skilled and younger migrants overall," according to budget papers.
About $85.2 million will also be spread over the next four years to help speed up the process of assessing and licensing foreigners with overseas qualifications - such as electricians and plumbers - to work in Australia.
The budget also set aside $74.2 million for court systems to combat misuse of the protection visa system, and about $20 million to better scrutinising applicants for student visas.
These form part of a four-year, $167 million package to strengthen the migration system's integrity.
The application fee for graduates seeking temporary visas doubled in March, a move expected to attract $1.2 billion more into federal coffers.
Labor has faced mounting pressure from One Nation and the coalition to put a lid on migration to reduce demand for housing and relieve burdens on services.
Support for One Nation swelled to new heights in the months after the Bondi massacre, with Pauline Hanson tying overseas arrivals to fraying social cohesion.
In April, federal Opposition Leader Angus Taylor also proposed imposing values tests and scouring the social media accounts of foreigners wishing to move to Australia.
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