Parts of corporate Australia have attacked the federal government's axing of 457 immigration work visas, claiming it is a politically driven move and unfairly targets less than one per cent of the workforce.
The Australian Institute of Company Directors says the overhaul of the visa system is a populist and protectionist move by Prime Minister Malcolm Turnball's government.
The 457 visa program has played an important role in addressing skill shortages, particularly during the mining investment boom, said the group's chief economist Stephen Walters.
"Shifts like this towards a populist, inward-looking, or protectionist approach by either side of politics ignore the fact that Australia is a participant in a global market for labour and capital," he said.
Australia needs an appropriate, non-discriminatory skilled migration program to help offset the ageing population, he said.
Until the replacement program is in place, it is difficult to assess whether it better addresses the nation's skills shortages, Mr Walters said.
The 457 visas are to be replaced by two visas, a temporary two-year visa designed to recruit the best and the brightest, and a four-year visa with tighter eligibility rules, including a high command of the English language and a criminal check.
The current list of 650 occupations that now qualify for a temporary visa will be cut by about 200, and applicants must have previous work experience.
Michael Wall, national leader of KPMG's immigration practice, said there is no evidence that the current system is not working properly.
"It is a demand-driven program, and the number of 457 visas has been on a decline over the last few years," Mr Wall said, noting there are 95,000 workers on the 457 visas, less than one per cent of the workforce of about 12 million.
"It is more expensive to hire people on 457s than recruit locally - so employers only do this when there are skills gaps they cannot fill domestically," he said.
Mr Wall said the changes go against a commitment to increase innovation, and creates uncertainty for foreign companies looking to invest or do business in Australia.
The powerful mining industry does not oppose the overhaul, but it wants it to be easier to bring in temporary foreign workers when needed.
Chris Wright, senior lecturer at the University of Sydney Business School, believes the 457 visa placed "far too much power in the hands of employers."
"The scheme used employer demand as the basis for identifying skills shortages, which was highly problematic," Dr Wright said.
The Turnbull government should establish an independent mechanism to verify the existence of genuine skills shortages before employers can employ workers on temporary visas, he said.
The new visa scheme will begin in March 2018 and will not affect current workers on the existing 457 visas.