Anthony Albanese has flagged a shake-up of a special visa deal that allows some British backpackers to skip regional work and instead head directly to popular city destinations.

The move follows warnings that Labor’s proposed cuts to working holiday visas could worsen staff shortages and deal a major blow to regional economies. 

Under the Australia-UK Free Trade Agreement, British citizens can apply for second and third-year Working Holiday visas without completing specified regional work, unlike backpackers from many other countries.

Albanese has acknowledged the arrangement has contributed to an influx of British backpackers taking up hospitality jobs in popular areas such as ‘Bondi Beach or Coogee’, while regional towns continue to grapple with worker shortages.

The agreement, which came into effect in 2023, had previously been ruled out for reform by the government.

However, the Prime Minister told parliament on Tuesday that the exemption was among the issues he would raise with UK Prime Minister Andy Burnham.

In August, Albanese said the deal with the UK was ‘a separate agreement as a result of the UK free trade agreement which we are certainly honouring’.

His comments come after the government announced plans to introduce ballots for second and third-year Working Holiday Maker visas, limiting the number of extensions available. 

Albanese has raised concerns about the UK trade deal that exempts British backpackers from completing regional work

Under the trade agreement, British citizens can apply for second and third-year Working Holiday visas without completing specified regional work

The PM says the deal has contributed to a surge in British backpackers working in hotspots such as Coogee (pictured) 

The proposed ballots would offer 45,000 second-year places, compared with about 57,000 people who qualified in 2026, while third-year visas would be slashed from 31,000 to just 5,000. First-year visas would remain uncapped.

Regional work can include farming, construction and mining, as well as certain tourism and hospitality jobs in eligible remote areas of Australia.

The proposed changes have raised concerns in regional centres such as Cairns, where tourism operators rely heavily on backpackers to fill temporary jobs.

Cairns MP and former Queensland tourism minister Michael Healy warned the changes would deal a ‘severe blow’ to regional Australia.

‘I don’t understand why the federal government is making these changes, and that’s more concerning,’ Mr Healy told The Australian.

‘Having run businesses in regional Queensland, and I think this applies across the country, our skilled migration workers and our backpackers are an essential part of regional economies.

‘You’ve only got to go into a local pub. You’ve only got to go into a local restaurant, particularly in the city of Cairns where I live.

‘Backpackers are a key and fundamental part of our economy. Any reduction in their numbers would be an absolute disaster.’

Cairns MP and former Queensland tourism minister Michael Healy warned the proposed working holiday visa caps would deal a ‘severe blow’ to regional Australia 

Regional work can include farming, construction and mining, as well as certain tourism and hospitality jobs in eligible remote areas of Australia

Albanese says he will discuss the trade agreement with the UK Prime Minister, Andy Burnham 

Queensland Labor leader Steven Miles, an ally of Albanese, also criticised the plans, calling on the Prime Minister to ‘consider the special circumstances of Queensland, particularly the reliance of our tourist industry on those visa holders, and our farmers who also rely on them’.

Albanese said the exemption for British backpackers was among the issues raised during a meeting with Queensland tourism industry representatives earlier this month.

‘Because at the moment, people unlike backpackers from other areas of the world who have to spend time in regional Australia, at the moment those UK backpackers are arriving in very large numbers, much greater than they were previously to that arrangement being in place,’ he said.

‘That is just one of the areas in which we will put forward changes, that requires discussions and I will be meeting with Prime Minister Andy Burnham, it is one of the issues that I committed to the publicans to raise with the Prime Minister of the UK.

‘It is something I have raised with him informally as well because we know that these issues are very important to be dealt with.’

However, the proposed visa changes have drawn criticism from the Nationals and One Nation, which have defended working holiday-makers as vital to regional Australia and argued they should not be targeted by the government’s cuts.

‘The system we’ve got with working holiday visas has worked – and worked for a long time,’ Nationals leader Matt Canavan said in August.

‘It’s not backpackers that are taking away houses from people in Sydney and Melbourne or Brisbane,’ Mr Canavan said, instead pointing to what he called an ‘unprecedented surge in student visas’.

One Nation leader Pauline Hanson also argued that migration reductions should focus on international students rather than backpackers. 

‘We cannot stop those people coming in; if they did, the farmers would go under,’ she said.