International student numbers will be cut to pre-pandemic levels next year after the government imposed controversial caps on student numbers in a move that critics call “short-sighted” and universities warn will cripple Australia’s science and research capabilities.

The new policy – which will next year set what the government calls a ‘national planning level’ of 270,000 new international student commencements, with around 145,000 of those roles at universities and the balance at VET institutions – has been designed to “protect international education from the crooks who try to exploit it… to make a quick buck,” Education Minister Jason Clare said in a press conference as the new policy was announced.

Citing concerns that “ghost colleges” were enrolling and collecting VET fees from large numbers of students but using educational spots as “a back door just for people to work here,” Clare said the government had shut down more than 150 such organisations and would, under the new caps, cut overall VET enrolments to around 20 per cent less than their pre-pandemic levels.

University enrolments will increase by 15 per cent compared with those levels, Clare said, noting that the government would assign each university its own enrolment cap, adding that “the big winners are regional universities” that will generally be able to enrol more students in 2025 than they did in 2023.

Regional universities have “borne the brunt of” the previously issued Ministerial Direction 107, he said, which was issued by former Minister for Home Affairs and Minister for Cyber Security, Clare O’Neil, last December to kick off a raft of changes that also included higher international student visa fees and extensions to the post-study stream of the Temporary Graduate visa.

“It’s important that we send a message to the world that we want students to come here to study,” Clare said, “but we want a managed system, not a free-for-all system.

“And we want to make sure that all institutions can benefit.”

Asked whether the cap could scare away potential applicants and inadvertently damage the sector – something that happened in Canada when an overall cap on international students saw applications plunge by 200,000 – Clare said the university-by-university cap would allow the government to step in where a particular university is oversubscribed, and allocate applicants to another institution.

Reflecting ongoing concerns that the flood of international students had sent rents surging by oversaturating rental markets in areas near universities, Clare said the new enrolment caps would include “incentives” for universities to build more housing for students – although the Student Accommodation Council has previously disputed this assertion in saying that international students comprise just 4 per cent of Australia’s rental market.

Offsiding the university sector

Universities – which have previously warned cuts to student numbers are “egregious overreach” that would cost Australia’s economy $4.3 billion and lead to the slashing of 10 percent of the 250,000-strong education sector – remain apoplectic about the changes, which are tied to the proposed Education Services for Overseas Students Amendment (Quality and Integrity Bill) 2024.

Vicki Thomson, chief executive of university industry body Group of Eight (Go8), warned that its eight member institutions remain “implacably opposed to international student caps”, blasting the government’s decision to implement caps as “reckless” and calling out the lack of economic modelling on the economic impact of the caps.

The government “is trying to steamroll the sector into accepting detailed caps before a clearly sceptical Senate has passed judgement on the ill-conceived legislation that enables these enrolment limits,” she said.

“Caps will not undo the damage of Ministerial Direction 107 as international students simply will not study where the Australian Government tells them to.”

Introduction of the caps is “a disappointing and short-sighted decision by the government and one that stands in stark contrast to the US and UK, which are welcoming international students with open arms,” noted Naresh Gulati, CEO of enrolment services provider Ascent One.

“Australia could learn a lot from the US and UK, which both stand to benefit enormously from the many cultural and economic benefits that international students can bring to a country.”

In the long term, the Go8 has warned, the chaos around Australia’s international student policy is likely to compromise Australia’s ability to pursue its newly released National Science and Research Priorities – a blueprint for focusing investment in areas like AI, quantum computing and robotics that relies on building robust and effective science and research sectors.

With Go8 universities undertaking 70 per cent of all university-based research in Australia and investing $7.7 billion annually – equivalent to 20 per cent of Australia’s total national R&D investment – innovation advocates warn the caps will stunt universities’ ability to recruit top students from overseas, with dire consequences for the national innovation agenda.

“The flow of international students has helped create one of the finest higher education systems in the world despite its challenges,” Sydney University vice-chancellor and president, Professor Mark Scott, recently told a Senate hearing while warning that the “highly arbitrary” Ministerial Directive 107 had “spooked” an industry that was already struggling with “fundamentally broken and totally inadequate” university funding mechanisms.

“The unprecedented, sweeping powers sought in this legislation loom as an extraordinary act of self-harm to the Australian economy,” he said.