Why is the government proposing caps on international students and how did we get here?

The federal government is due to introduce legislation on Thursday to enable new caps on the number of international student places at educational institutions in Australia. These include universities, TAFEs and private colleges.

The government is proposing that education providers wanting to go over their allocated limit would have to build new accommodation for international and domestic students.

As Treasurer Jim Chalmers noted in his budget speech on Tuesday night:

We will limit how many international students can be enrolled by each university based on a formula, including how much housing they build.

So, what’s been proposed and how did we get here?

What’s been proposed?

The legislation will:

• pause applications for registration from new international education providers and of new courses from existing providers for periods of up to 12 months

• require new providers seeking registration to demonstrate a track record of quality education delivery to domestic students before they are allowed to recruit international students

• prevent providers under serious regulatory investigation from recruiting new international students.

How did we get here?

For the last 40 years or so, successive federal governments have focused on developing the international education sector. That’s included national branding campaigns, regulation of international education providers, and creating favourable visa conditions that allow students to work part time during their studies.

It worked very well, making Australia one of the world’s leading destinations for international students.

International students enliven our campuses and cities, contribute to meeting our skills needs, and create lasting connections between Australia and our region. And, as the Universities Accord final report noted, international education is now Australia’s fourth largest export, supporting around 250,000 jobs and funding a significant proportion of our universities’ research.

But the rapid growth in student numbers post-COVID has the government worried about unscrupulous education providers and the shortage of rental accommodation in our big cities.

Many have argued that international students, who constitute only 4% of renters in Australia, are not a major cause of Australia’s housing shortage. Nevertheless, the accommodation shortage does significantly impact students, who often have great difficulty securing a place to live.

Strong recent growth after COVID

For the last couple of decades, enrolment of international students has dipped here and there but has been fairly consistent over the long term. Since 2005, the number of international enrolments has grown by less than 6% per year on average, according to official figures.

The international student enrolment numbers we see now are not an aberration from historical norms. The number of students last year was only slightly higher than five years earlier.

The issue right now is that year-on-year growth has been very strong as students return to Australia after arrivals were ceased for years during the pandemic.

The previous government put in place a range of settings, such as allowing international students to work more hours, to address labour shortages and to help attract students back after COVID. That also helped to diversify the student population, reducing dependence on China, attracting more students from countries in South Asia and Southeast Asia.

So the rate of growth has been quite fast in the last couple of years. That has spooked politicians and some sectors of the public.

People in the education sector have been saying this recent growth looks huge but that’s because we are coming from a low recent number of international students. As international education expert Jon Chew has written, “this is a textbook V-shaped recovery and catch-up rebound”.

According to this view, student numbers will soon stabilise.

The Albanese government will attempt to cut migration by limiting the number of international students under a new cap system: https://t.co/q898kjnG2z pic.twitter.com/pHHdn5KHey

— The Australian (@australian) May 11, 2024

What are other countries doing?

There is no easy way for governments to manage changes in the number of international students. And it’s not just an issue for Australia. Canada and the United Kingdom have also experienced rapid growth after COVID are similarly grappling with ways to quickly reduce the number of new students to sustainable levels.

The UK has restricted the ability of international students to bring accompanying family members. Canada has introduced caps on international students at a provincial level and limited access to post-study work visas.

So far, Australia’s approach to managing growth has been to quietly introduce new procedures for assessing visa applications, resulting in unprecedented numbers of refusals.

What about the issue of ‘ghost colleges’?

There has been extensive reporting in Australia on the problem of “ghost colleges”.

The government has promised to crack down on “dodgy operators” who are taking advantage of international students.

This is not the first time we have seen a small number of private colleges tarnish the reputation of the whole sector, and moves to improve quality assurance have been wholeheartedly supported by peak bodies.

Australia's university sector is warning against the federal government's plan to cap international student numbers, as a meeting between ministers and the International Education Council is held this morning. https://t.co/LZPa4tzua6

— ABC News (@abcnews) May 13, 2024

What will it mean for universities and colleges?

Some parts of the tertiary education sector are expressing strong concerns about the potential impact of caps on students, providers and Australia’s reputation as a welcoming country.

The government has not yet announced how caps will be set. It has signalled that it wants to use caps to increase the proportion of students outside of Sydney, Melbourne and Brisbane, because regional universities haven’t benefited as much from the surge in international enrolments.

This would require restricting student numbers at institutions in those cities while allowing those in the rest of the country to grow. But students may choose to go to different countries altogether.

As University of Sydney vice-chancellor, Mark Scott (who is also chair of The Conversation’s board) told the ABC:

If you send a message to international students that they’re not welcome, they have many other options.

What happens now?

The tertiary education sector is now waiting to see more detail in the legislation, which will obviously need to pass both houses of parliament.

At it’s heart, the government is trying to deal with multiple complex issues here. These include public perceptions about migration levels, a national housing crisis and universities’ reliance on international students to fund facilities and research.

In the past, governments were able to respond to such concerns by setting the rules and allowing education providers and students to make their own decisions.

Now the federal government is proposing an unprecedented level of micromanagement, giving it a much greater role in deciding where students enrol, what they study, and where they live.