Higher education institutions around the world have been practising student mobility as a means of internationalization, and these educational practices have specific focus on student identity construction and culture (see Deardroff, 2006; Lewin, 2009). Although relatively new in comparison to Europe and the US, with the New Colombo Plan, Australia has joined in the practice of outbound mobility programs by which local students are encouraged to complete a part of their studies overseas (DFAT, 2013). In this paper we suggest that student mobility programs are posed as the ‘solution’ to the constructed ‘problem’ of Australian students lacking intercultural and globally-aware citizenship skills. The emerging Australian higher education literature similarly assumes inherent and obvious benefits of mobility programs, and much of the literature overlooks the issues of students’ existing cultural identities. (Crossman & Clarke, 2010; Clifford, 2011). Accordingly, the diversity of local Australian students tends to be oversimplified. In addition, the existing literature fails to examine the colonial impulses and neoliberal agenda embedded in mobility programs. Thus, there is a need to critically analyse government and institutional student mobility policies through the discourse of internationalization. This paper presents a policy analysis made through the lenses of postcolonial, Foucauldian and southern theories and extends current understandings of student identity [re]formation. It also problematizes the ways in which policies overlook the importance of cultural diversity. This study explores why this particular policy problem has been constructed in this way by drawing upon Bacchi’s (2009) form of policy discourse analysis. While acknowledging the social aims of government mobility policies, this study offers a nuanced and more complex understanding of diversity in student identity, which could be accommodated in internationalisation programs on home campuses and design of culturally sensitive mobility programs. References are available upon request.