The Migration Institute of Australia has called for the government to drop the plan, and drop the tender process which is due to be finalised with the winning consortium this month.

According to the institute, which is the peak body for migration agents in Australia, the plan would reduce integrity in the system, increase costs to applicants and make protecting personal data and national security more difficult.

The Migration Institute's president John Hourigan said the institute was concerned the privatised system would be "misused as a commercialised platform for added on and 'premium' services," increasing costs and difficulty in applying to come to Australia.

"Many applicants pay significant additional costs related to their visa applications, including undertaking skills assessments and health tests," Mr Hourigan said.

"These costs when added to increased application fees may prompt unfavourably comparisons with other countries and be detrimental to government initiatives, such as those designed to encourage the 'best and brightest', investors and skilled migrants to Australia."

Tourism and initiatives to attract migrants to regional areas could also be impacted, he said.

Mr Hourigan pointed out how Australia's higher education sector relies on revenue from international students, but is vulnerable to macroeconomic factors like the China-US trade war, and is becoming less attractive with fewer pathways to permanent residency.

"Large scale fall in the number of student visa applications will impact the revenue raised by the [global digital platform], with the potential that investors in the platform will look to increase the costs to other visa applicants to cover the shortfall," he wrote.

The Migration Institute is also concerned about what personal information will be kept by the companies and how it will be used or onsold. Mr Hourigan asked for more information to become publicly available about the system, so its risks could be properly assessed.

A spokesperson for the department said all application data will remain the property of the government, and the tender documents require it to be stored in Australia and "subject to Australian and relevant international privacy legislation".

A series of privacy impact assessments have been commissioned "to ensure compliance with relevant legislation and Australian Privacy Principles," the department said, and strong protections would be in place to protect the data.

Under the government's plan, a private company would build a digital platform to process the bulk of applications for temporary visas to Australia, in a move the department says would allow government staff more time to assess more complex applications.

Home Affairs secretary Michael Pezzullo has said the system needs to be replaced as the outdated computer systems currently in use were struggling to keep up with demand, along with problems created by the 50 different systems used in visa processing at the moment.

In a statement this week the department said the new platform will "provide a seamless digital user-centred application experience for visa applicants, sponsors and employers that will maintain Australia's national security and support economic growth".

Former Immigration Department deputy secretary Abul Rizvi said there was "no question" existing systems needed regular upgrading or even a major re-development, but echoed the Migration Institute's concerns that the government had not properly addressed the risks associated with privatising visa processing.

"The risks associated with visa privatisation, once Home Affairs has become totally dependent on a monopoly owner of the visa processing IT platform, are extensive," Mr Rizvi said in his submission to a Senate inquiry into the privatisation of government service delivery.

"Home Affairs has provided no explanation of how these many risks are to be managed."

READ MORE

The government already charges fees for visa applications, with the system worth more than $2 billion a year to government coffers.

Mr Rizvi has warned that privatising the system could compromise the government's income from the system, and pressure will grow over time to increase both the private company's portion of visa application fees and the number of visas approved.

"Each further fee increase will also impact on the competitiveness of key Australian industries, including tourism and international education," Mr Rizvi said.

"The pressure from the private company to increase fees and grow the caseload further (ie increase net overseas migration levels) will be intense."

The Department of Home Affairs maintains the visa system is not being privatised and the department will remain "responsible and accountable for all visa decision making (including intelligence and risk assessment functions)".

"The department alone will determine the business rules and processes the platform delivers."

The department refuted the suggestion there could be national security risks from the program.

"The Commonwealth will always retain direct responsibility and accountability for sovereign functions including visa decision making, national security, and intelligence," the statement said.

The years-long process to privatise the visa processing system has already been the subject of political controversy, with Labor and the main public sector union opposed to the move they believe will result in the loss of public service jobs.

It has also attracted probity concerns, with one of the two remaining bidders for the contract, expected to be worth more than $300 million a year for the successful company, helmed by Scott Briggs, Liberal party heavy-weight and friend of Prime Minister Scott Morrison. Mr Briggs is also a former colleague of Immigration Minister David Coleman. It has been reported Mr Morrison has recused himself from making decisions on the project.

Mr Briggs is chief executive of Pacific Blue Capital, which holds a 19 per cent stake in the Australian Visa Processing consortium, along with Qantas Ventures, PwC and Ellerston Capital.

The other party still in the running is a partnership between Australia Post and Accenture.

According to tender documents, the government plans to finalise the deal this month, and the department said this week the procurement process is "underway as per the timelines set out" in the tender documentation.