The anti-immigration party's proposal to temporarily institute "net-negative" migration would cripple Australia's ability to raise its citizens' quality of life and build its way out of a housing crisis, the peak bodies say.
"Major cuts that reduce skilled migration would damage our economy, hit the budget and weaken our capacity to provide services for, and lift, living standards," Australian Chamber of Commerce and Industry chief executive Andrew McKellar said in a statement on Monday.
"Business is asking all decision-makers in Canberra to ensure migration policy settings are designed from what Australia needs up, not to chase an arbitrary (net overseas migration) figure."
Two-thirds of student visas would disappear under One Nation's plan, with leader Pauline Hanson saying universities would still be able to enrol more than 100,000 international students per year.
The senator said the cut would not affect regional worker schemes.
The party would install a ceiling of 130,000 net overseas migrants a year, about 100,000 fewer than Labor's long-term forecasts and well below the coalition's housing-dependent figure of about 170,000.
The slashes to international student numbers, which have made education Australia's third-largest export, drew staunch criticism from the business leaders.
"Australia has built a global reputation for excellence and we should not allow that to be traded away in a race to the bottom on migration," Mr McKellar said.
The policy faced similar rebukes from the Business Council of Australia and the National Farmers Federation.
Labor and the opposition have propped the economy up through "mass migration", according to Senator Hanson, who is also facing heat for saying Indigenous Australians were "the most primitive race on Earth" in a 2025 podcast interview that resurfaced on Monday.
Critics said the populist party was too fixated on lowering the much talked-about net overseas migration figure, which sits at 301,000, and had a scant regard for costs.
"If Pauline Hanson thinks this is a good policy, where's the modelling on what it will do to the economy, what it will do to housing?" Social Services Minister Tanya Plibersek told News24 on Monday.
"We've tripled the number of skilled visas of people who work in construction. We've already reduced immigration numbers by 45 per cent, we're going to bring down those numbers further."
It's expected Labor is preparing to announce its revamped migration policy, after false starts including a last-minute cancellation of a National Press Club address by Home Affairs Minister Tony Burke in August following cabinet divisions.
Prime Minister Anthony Albanese and his counterpart Angus Taylor met multiple times in the week to September 11 to discuss cracking down on phoney asylum claims and student visa appeals.
Nationals leader Matt Canavan accused One Nation of misunderstanding migration policy after spokespeople dithered for weeks over policy and used statistics interchangeably.
"There's a reason One Nation have had four policies in four weeks, is they've gone off half-cocked a number of times, they haven't quite understood the complexities," he told ABC TV on Monday.
"We want to see substantive cuts to migration. Our policy is that it should be much lower than what (Labor) are projecting."
Greens senator David Shoebridge said the idea of giving Australia's roughly 80,000 visa overstayers three months to leave under threat of permanent re-entry bans indicated a callous policy.
"Behind One Nation's statement is the threat of detention camps, the threat of putting people in even more cruel prison systems ... they want to put them on a plane to Iran, they want to put them on a plane to Russia," he told reporters on Monday.
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