Strand beach in Townsville. The state MP says working holiday visa holders are ‘central to our economy here in north Queensland’.

Photograph: Fraser Barton/AAP A working holiday visa changed Sydney Schetter’s life.

The barista came to Australia from a small town outside Edmonton in Alberta in 2019. When she returns to Canada after her visa runs out next month, she won’t be alone.

“My partner, who’s Australian, is probably going to come next year when his visa gets approved,” she says.

During that seven-year stretch, Schetter was able to travel around Australia and abroad, learn a trade and make friends from around the world.

That was only possible because she lived in regional Queensland during the Covid-19 restrictions. Her nominally one-year visa was repeatedly extended due to her work at the Watermark hotel on Townsville’s Strand waterfront, and thanks to loosening of visa rules early in the pandemic.

Schetter says she’d never have done any of that if the federal Labor government’s new rules had been in place.

The home affairs minister, Tony Burke announced last month that the government would cap the number of second-year working visa holders at 45,000, down from 57,000, and third year at just 5,000, less than one-sixth the approximately 31,000 issued currently.

Applicants will enter a ballot to be one of the lucky few. Holidaymakers from the United Kingdom will be exempt, as they already are from regional work. “I wouldn’t even bother applying for my second year, maybe,” Schetter says.

That wouldn’t just crimp working holidaymakers’ love lives, it might also harm the economy. North Queensland’s business community says they are so dependent on workers like Schetter they’re concerned that if short-term visa holders like her do choose to stay away it could mean insolvency.

Australia has been issuing one-year working holiday visas since the Whitlam government. John Howard added a second year in 2005, on condition the worker do at least 88 days’ work in a prescribed industry in regional Australia, a category that defined so broadly it includes the Gold Coast, Newcastle and the entire states of Tasmania and South Australia plus the Northern Territory. There’s been a third year available since 2019.

Businesses worry the reform will reduce the value of the 88-day rule, meaning workers may choose Sydney or Melbourne over Townsville.

That would have a real impact on worker numbers. According to a recent survey by the Townsville chamber of commerce, about 70% of local businesses employed at least 10 working holiday visa holders, well over 60% of their total staff headcount.

Bart Furst, a director of Kickon Group, which owns the Watermark hotel, says they can employ upwards of 40 or 60 people on a working holiday visa, out of a total of 120 staff. Townsville has a low unemployment rate and Furst says he can’t convince locals to work there.

Sydney Schetter found work at the Watermark Hotel, run by Bart Furst.

“A lot of [working holiday visa makers] have said they’d look at New Zealand or something before even visiting here,” he says.

He says they could be forced to cut back hours, as many businesses did when backpacker labour dried up early in the pandemic. ‘What’s the argument for changing this’?

The business backlash has spilled over into local politics The Queensland premier, David Crisafulli, who grew up in Ingham and often reminds the state his family are Italian migrants who worked the region’s cane fields, has repeatedly called the policy “nuts”.

Townsville LNP MP Adam Baillie says working holiday visa holders are “central to our economy here in north Queensland”.

“In regional Queensland, we need every hand we can get.”Townsville LNP MP Adam Baillie. Cairns even the Labor MP is unhappy. There are an estimated 5,500 working holiday visa holders in the popular backpacker destination, according to the local chamber of commerce.

State MP Michael Healy, a former hotelier and current shadow minister for tourism, says since last month’s immigration reduction announcement he has received angry calls from everyone from publicans in the Atherton Tablelands to Great Barrier Reef tourism operators.

“We need migration, and we need backpackers, particularly in regional Queensland and regional Australia,” he says.

Healy says the policy would slow the growth of Cairns. It could even knock the city into recession.

“What is the argument to changing this? What is the science behind that?”The member for Cairns, Michael Healy.

Photograph: Darren England/AAP Federal Labor MP for Leichhardt and Cairns local, Matt Smith, will lead a delegation of local business leaders to Canberra to meet Burke. Smith says his role is “making sure the far north’s voice is being heard” – but isn’t against the policy. They aren’t asking for a reversal of course.

“The thing that no one has objected to was that the numbers have been unsustainable,” he says.

“Everyone acknowledges that it’s now about refining the process so that the workforce is going where the workforce needs to be, and it needs to be in the far north.”Announcing the changes, Burke said his immigration policy would slash net overseas migration (Nom) to about 225,000 in 2027-28, down from 292,000, and would “ensure that our migration system can be better targeted to the current needs of Australia”.

The Coalition responded with an even higher cut to migration reducing the figure to 100,000 for the first two years from 2028-29. The Nom target would then rise to 130,000 in the third year and 160,000 in 2031-32.

One Nation is aiming for zero net migration. After three years [when their policies would mean net negative Nom], One Nation said it would set a Nom “ceiling” of 130,000 a year. ‘We’ve got no young people’Working holidaymakers represent Australia’s second-largest source of immigration. About 78,300 arrived in the country in 2024–25, according to the Australian Bureau of Statistics, compared with 146,700 university students. There were about 206,000 working holidaymakers the country at last count.

It has been estimated that every 100 visas create about five net full-time equivalent jobs in Australia Most backpackers live in the big cities, but more than half the jobs they work are in two industries: tourism and agriculture.

Kaya Barry, senior lecturer at Griffith University, says the government could have targeted student visas rather than working holidays to slash net migration, but didn’t want to deal with the political consequences of hitting the university sector, she says.

“It’s a divide between metro and regional Australia, and I think that’s an easy [choice],” she says.

“The votes are not in regional Australia. People in cities don’t know what backpackers do beyond them partying at Bondi.”There are working holiday visas across regional Australia, she says, working as au pairs, fencers or nurses.

The impact of losing young people will go beyond the economic, particularly in small-town Australia, she says. Barry travelled across the country in 2022 studying the visa class, just after the border opened. Without working holidaymakers, many towns were struggling, they’d lost vibrancy, she says.

“They were like, ‘We’ve got no young people. The pub had to close, didn’t have enough business,’” she says.

“You’ve got 49 nations who come into a regional town. The cultural immersion that the individuals get on the visa, but also the hosting communities in farming areas or tourism areas, it can’t be understated”.

Schetter says she’ll be sad to turn her back on Australia next month. At least part of the decision is, once again, about visas.

It’d be much harder for her to get permanent residency in Australia – a place she has lived in for seven years – than it will be for her partner, Sam, to move to Canada, even though he has never been there.

It’ll also be much cheaper. “The partner visa for him to come to Canada is less than $3,000. Anyone that I know who’s done partner visas paid more than $10,000, including the lawyer,” she says.