Labor’s international student cap an ‘unprecedented’ overreach and ‘recipe for chaos’, experts warn

Labor wants to reduce net annual migration to 260,000 by 2025, in large part by tackling international student numbers. Photograph: Dean Lewins/AAP

The Albanese government’s proposed cap on international students is a “recipe for chaos” and the largest ever government overreach in Australia’s higher education system, leading policy experts have warned.

A bill introduced to parliament by the education minister, Jason Clare, last week, would give him powers to set a maximum number of new international student enrolments for courses and providers, with universities’ ability to enrol more students dependent on the establishment of new purpose-built student accommodation. A similar cap would operate for the VET sector based on advice from the skills and training minister.

The changes come after the number of international students in Australia shot up from about 580,000 pre-pandemic to 700,000 in February. Clare has argued the changes are aimed at ensuring international education “delivers the greatest benefit to Australia, whilst maintaining its social licence”.

Labor wants to reduce net annual migration to 260,000 by 2025, in large part by tackling international student numbers, but immigration and higher education experts have fiercely criticised the “unprecedented” plans for a cap set by the minister.

The former immigration department deputy secretary Abul Rizvi described it as a “recipe for chaos” that risked the closure of universities if managed poorly.

Rizvi suggested the cap was likely being introduced as a “stopgap measure” in response to historically high net migration levels and low housing supply, with Labor hoping it won’t need to be used.

“It’s quite extraordinary [policy] and all about getting to the 2025 election,” he said. “The levels of intervention exceed anything I’ve ever seen in any other industry. This gives them the power to tell a business how many customers you can have, what they can buy from you and how much.

“The power and its use is unsustainable. You can’t run an industry this way.”

If passed, the legislation would come into effect from 1 January. Rizvi described what he claimed would be 12 months of “chaos” where institutions rushed to get applications in over the next 12 months, while providers facing lengthy visa approval wait times would be under pressure to refund the tuition fees of unprocessed students.

Andrew Norton, a professor in higher education policy at ANU, said a cap was the most “radical limits on student choice and university autonomy” he had witnessed.

In a blog post this week, Norton wrote that the wide ministerial discretion of powers was entirely “new legal territory” and a “significant problem over-and-above the direct consequences of capping”.

According to the bill, the minister could cancel international enrolments for providers and/or courses on the basis of “systemic quality issues”, courses providing “limited value” to Australia’s skills needs or because it is in the “public interest to do so”, such as due to student exploitation.

Consultation with regulators, higher education providers or the department of education would not be needed in most cases and institutions that exceed their cap would risk a year-long suspension from enrolling new students.

“The level of ministerial discretion is unprecedented … the powers are there [and] the mere possibility of their use changes the government-university relationship,” Norton wrote.

“With the government and opposition united against international students we have to accept that provider caps will happen. But course level caps … are in fundamental conflict with principles of student choice and university autonomy.”

International students are Australia’s most successful service export industry, contributing $48bn to the economy in 2023. With federal investment in research and development at 30-year-lows, universities have become increasingly reliant on the sector to remain viable.

Group of Eight (Go8) universities educate one in three international students, who account for more than 30% of entire revenue streams at the University of Sydney, Monash, UNSW and the University of Queensland.

The vice-chancellor of the University of Sydney, Mark Scott, prospective students looking Sydney or Melbourne would also be considering “other top international universities”. “We need students to continue to feel welcome here,” he said.

“We’re competing … with universities across the world, and want to make sure the best and brightest have Australia and Sydney at the top of their list as a study destination.”

The University of Sydney was the only institution in NSW to record a surplus last year and 46% of its enrolments now come from overseas.

The Go8 chief executive, Vicki Thomson, said universities and purpose-built student accommodation providers were “already investing heavily” in affordable options.

Asked how universities will offset the sharp decline in international student numbers, Rizvi claimed “they’re going to have to start cost cutting”.

“They’ve designed the system not in terms of academic excellence, but revenue generation,” he said.

“A better policy would be to place a higher cutoff score on entrance exams so universities don’t put forward students with poor scores. You’d still control the numbers by letting them compete.”

Clare told Guardian Australia the federal government was working closely with state and territory governments and education providers to help international students find housing, adding the reforms will help to “provide certainty for universities”.