Universities Australia chair David Lloyd says international student caps ‘wilfully weakening’ economy

The federal government has been accused of “wilfully weakening” Australia’s economy through a key policy decision.

Changes to the number of international students allowed to study in Australia will deliver a brutal blow to the nation’s economy, a top education figure has warned.

The Albanese government has been accused of using universities as a “political pawn”, “wilfully weakening” Australia’s economy and worsening the skills shortage with the student caps, which are set to begin in 2025.

Universities Australia chair David Lloyd says the long-term damage of international student caps “remains to be seen,” warning the hit to Australia’s economy “won’t be pretty”.

“Using these talented individuals, who have hitched their hopes for personal advancement to an Australian wagon, as cannon fodder in a poll-driven battle over migration just damages our nation’s standing and reputation and our universities with it,” he told the National Press Club on Wednesday.

Universities Australia chair David Lloyd said the government’s tertiary education policy was harming one of Australia’s biggest exports. Picture: NewsWire / Martin Ollman

In August, Education Minister Jason Clare announced Australia’s intake of international students would be reduced by nearly 20,000 to 270,000 for the 2025 calendar, pending the legislation passing parliament.

Under the changes, universities will be given individual caps, with major Group of Eight universities facing cuts of 27 per cent cut and intake for regional unis increasing by 83 per cent.

On Wednesday, Mr Clare defended the caps and said they were necessary so migration could return to “pre-pandemic levels”.

He added that it was a fairer solution compared with the widely opposed Ministerial Direction 107 (MD107), which called on unis to approve students based on risk of them not leaving Australia once they completed their studies.

“Universities don’t run the migration system, Australian government should and this will help us do that (and) also make sure that we do it in a way that protects its integrity,” he said.

Although the government maintains universities will “have roughly” the same amount of students as last year, Professor Lloyd accused Labor of limiting enrolments “in a bid to neutralise the perceived political damage it is suffering from high migration rates”.

Professor Lloyd, who is also serves as University of South Australia vice chancellor, feared the caps would create more damage to the sector.

“I would be saying take MD107 off the table now and look at the landscape. See the damage that’s been done through that one intervention before you intervene and do a second one at the same time,” he said.

Professor Lloyd said the caps would also worsen Australia’s skills shortages and reduce university revenue and therefore their capacity to reinvest into other operations.

He added that “international competitor nations,” such as the UK and the US, were “standing by ready to capitalise on our poor policy decisions”.

“In wilfully weakening our economy by capping international student numbers, the government needs to consider how many businesses it is wilfully putting at risk and how much damage to the economy it is knowingly prepared to do at the very time when our economy is stalling,” he said.

“The other real danger of using students for political gain is what we stand to lose by turning them away when we are we are in a global race for talent.”

Education Minister Jason Clare international student caps have been lashed by universities. Picture: NewsWire/ Martin Ollman

Professor Lloyd also called for “bipartisan support” to boost the sector, like increasing funding for research, which he was needed now that universities had “less international student revenue to fund this important work”.

“What good is a $22.7bn investment to build a Future Made in Australia without the research and development work required to spur the growth of new industries?” he said.

“We can’t afford to kick the can down the road, not when our productivity, economic growth and a major component of the government’s own agenda depends on this work.”

Labor’s caps have been unanimously lashed by Australia’s largest universities, with Group of Eight chief executive Vicki Thompson accusing the government of “steamrollering the sector” with the unexplained numbers.

While the Coalition has supported students caps in principle, the opposition’s education spokeswoman Sarah Henderson has demanded another senate hearing into the potential legislation.

Originally published as Universities Australia chair David Lloyd says international student caps ‘wilfully weakening’ economy