Business groups, miners and the housing industry have welcomed the federal government's changes to the migration system.
Data show Australia's population grew by 392,700 people in the past year. The government's policies could see that number drop to about 325,000 a year.
Tony Burke, the minister for immigration, announced Labor's much-anticipated migration policy reforms on Thursday.
His announcement came days after One Nation unveiled plans to push NOM into negative territory for three years before imposing an annual cap of 130,000, and as the Coalition finalises plans for a policy that is expected to pursue NOM of between 150,000 and 170,000 people.
Labor plans to introduce a ballot system for the Working Holiday Maker program, and to set processing times for applications for the program to three months.
Andrew McKellar, the chief executive of the Australian Chamber of Commerce and Industry (ACCI), said the policy package was a "material toughening" of the migration system, but it could still be improved.
Mr McKellar said the overall level of migration under Labor's plan would also be reduced, "which is something that is acknowledged the public has been calling for."
Mr Burke said he still wants to see net overseas migration continue to decline from its current rate of around 292,130 people to 225,000 a year by 2028.
"The government's plan makes sense," MCA chief executive Tania Constable said on Thursday.
"The MCA raised serious concerns in August about changes introduced in July that pushed many skilled applicants outside Australia further down the visa processing queue."