Liberal MPs say skilled migration and international student numbers must be cut to reduce overseas arrivals into Australia, but have warned colleagues against demonising multicultural communities ahead of the next election.

The Coalition is preparing to thrash out the design of a policy to significantly cut immigration places, as the opposition leader, Sussan Ley, struggles to keep moderates and conservatives united. Ley and shadow ministers Jonathon Duniam and Paul Scarr want the policy debate before the end of the year, and could link places for overseas arrivals to capacity for home construction and health and education funding.

New South Wales Liberal Jess Collins said skilled migration numbers should be pared back.

“That’s where the first cut is going to come from,” she said.

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“I know we need skilled migration for a lot of areas, and the trades are a huge part of that, but we know that the unions are stopping us from getting skilled trades in and they’re making it very very difficult for skilled people to use their skills in Australia.

“We need to look at the skills list, match them to the skills we really need and then the surplus, superfluous skills that are coming in, they can all get cut.”

Collins is closely aligned with the shadow defence minister, Angus Taylor, a leadership rival to Ley.

South Australian Leah Blyth, a conservative Liberal senator aligned with power broker Alex Antic, pointed to overseas education for cuts.

“I very much see foreign students as a way for us to regulate migration numbers,” she said.

“I think I’m really careful that in this we are nuanced enough that we’re not anti-migration, immigration … we’ve got to be really careful in terms of how we do that in a way that’s sensitive.”

The child of immigrants with English, Indian and Burmese heritage, Blyth said careful messaging was required.

“I’m a first generation Australian. I could only come here because Australia abolished the White Australia policy, or my family could. So I’m very pro migrants, and I can see, you know, the kind of life that you can build yourself in Australia is the lucky country.”

Blyth added the Liberals had “abandoned the centre right of policy politics” and needed a sensible immigration position to win back voters from One Nation.

“If we take too long, I worry that there are other things that will fill the void if the Liberal party abandons that, you know, centre right position,” she said.

The head of Commonwealth Bank, Matt Comyn, told a parliamentary committee on Tuesday restricting migration to about 180,000 people each year would give the federal government and the states “the ability to plan for critical infrastructure, including housing”.

Former prime minister Tony Abbott, whose views remain influential among parts of the parliamentary party, has described Australia’s immigration intake as “miles too high” and urged cuts of as much as a third, back to Howard-era levels of about 100,000 people.

Abbott used an Institute of Public Affairs podcast to call for migration levels that were good for Australia, “not because it’s beneficial for the migrants”.

“It’s more likely than not that the productivity of migrants, on average at the moment is below that of the general population,” he said.

“No one should be coming in from overseas to do a job that might be done by an Australian with better training and higher pay, and I think that’s the way forward.”

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Accusing Labor of pursuing a “mass immigration agenda”, Liberal backbencher Jacinta Nampijinpa Price said significant cuts or a temporary pause to parts of the migration program were needed.

“Our nation’s future success means prioritising the institution of the family ahead of migration,” she said this week.

“It’s now time for the Liberals to stop pandering to sectional interests like the elite metropolitan universities and big business lobbies.”

Sarah Henderson, who has criticised Ley’s leadership of the party, called at the weekend for a Dutton-era policy restricting university enrolments to be reinstated. That plan would require student cohorts to include no more than 25% of foreign residents.

Andrew Bragg, the shadow housing minister, said on Tuesday Australia needed more skilled tradespeople to migrate, blaming the CFMEU construction union for blocking foreign workers. He said chronic lack of housing supply was the fundamental problem.

“You could turn the tap off overseas arrivals today and it still wouldn’t solve the housing crisis. Australia needs to build more homes.”

Net overseas migration (NOM) is the difference between the number of people arriving and staying in Australia for longer than 12 months and the number of long-term and permanent departures.

In the year ended 31 March 2025, NOM was 315,900. Treasury expects the figure to drop to 260,000 this financial year and 225,000 for the next three years.

Labor has left the permanent migration intake for this financial year unchanged, at 185,000 people.

The opposition is expected to determine broad principles for a policy position in coming weeks. A target isn’t expected until closer to the next federal election.

Duniam said on Tuesday new housing construction numbers, as well as health and education funding, should be considered when setting Australia’s overseas migration intake.

“I think you will find we will announce how we will devise a number, how we will take a commonsense approach to devising, how we work with the authorities, both state and territory, to figure out how many people we can bring into the country sustainably, without overloading public health and education,” he told ABC on Tuesday afternoon.