This government knows how to make a tough problem even worse

The Albanese government’s legislation to cap international student numbers creates political risk for business and breaks basic principles of governance

Let’s start by recognising that it was never going to be at all easy or straightforward to manage the return of international students to Australia after Covid-19.

After the borders were closed for two years there were hundreds of thousands of them wanting to come and, with the Australian economy hit by labour shortages and rising inflation in 2022, there was a consensus – shared by business, both sides of politics, and education providers – that we should facilitate students’ return.

This “loose borders” policy manifested itself in numerous ways. Until mid-2023 every flag that was flying was saying to international students that Australia welcomed them and wanted them working here to ease the shortage of workers in low-skill jobs.

The 40 hours a fortnight work limit for international students was removed during Covid and reinstated as a 48 hours a fortnight limit in July last year.

Early in 2023, the Albanese government extended international students’ period of post study work rights after they graduated. The special pandemic event visa, which allowed people (including international students) caught in Australia by Covid travel restrictions to remain here and work, stayed open to new applicants until September last year.

Then came the realisation that the return of international students was turning into an unsustainable boom. It had enabled the return of dodgy colleges and shady education agents who were exploiting student visas for migration. And it was becoming a large political liability, with voters very willing to blame large numbers of international students for housing shortages and rising rents.

So, in the second half of last year, policy turned on a dime.

A crackdown started on dodgy operators, which was the right and necessary thing to do.

But spooked by rising net migration figures the Albanese government’s attitude to all international students swung from open arms to closed doors. Post study work rights were reduced and the level of savings student needed to show they had was raised.

But the big move came in December last year with a slowdown in student visa processing and, though it never admitted it, a step-up of the rate of student visa refusals. The fig leaf rationale was that it was a move to boost quality and reduce malfeasance by prioritising the visas of students studying with the education providers judged by the Home Affairs Department to be lowest on their visa risk rating.

That was just an excuse. Student visa approvals fell as students who would have once been assured of a visa (and had been told by their agents and education providers that they met the known criteria) no longer did. Other students has their applications disappear into the ether, place on to a long hold.

It was a visa cap by stealth, but not very cleverly conceived.

The big winners were Chinese students who, generally of low visa risk, continued to pour into the big, highly ranked universities that they favour – Sydney, University of NSW, Melbourne, Monash and Queensland.

But many other universities, which had large numbers of South Asian students, had large holes punched in their 2024 budgets because of the loss of international student fees.

It was not a viable policy. So in last week’s budget the government came back with a new, officially acknowledged visa cap. It has introduced legislation giving the education minister and the skills minister huge powers to limit the number of international students at particular universities or education providers, as well as limit the number of international students in particular courses.

Australian National University higher education expert Andrew Norton points out that, in a seeming catch-all, limits can be imposed on a class of courses with reference “to any matter”.

Penalties for breaching a cap are severe. An education provider can have a course suspended for a year or, if the provider’s overall cap is breached, have virtually all of their activities suspended for a year. The list of things that are troubling about the government’s student visa caps legislation is very long.

For a start, instead of offering stability to a valuable industry – it has $48bn in annual export revenue and is a “soft power” generator for Australia – it has introduced the ultimate destabiliser. Public universities and TAFEs are targeted and the many high quality, privately owned vocational colleges, English schools and higher education providers that operate within the rules are now subject to an extraordinary level of political risk – one that any level-headed investor would steer well clear of.

The legislation hands the two ministers powers greatly in excess of what is needed to deal with the perceived problem. It breaks basic principles of governance.

It is also totally impractical for the government to use the powers this legislation gives. Education bureaucrats are not remotely equipped to deal with each of the 1400 education providers this legislation applies to.

One key safeguard of the system has already fallen. We can’t look to the opposition – supposedly the party of business – to oppose it, or even ask the tough questions, because its policy is to go just as hard, or even harder, on international students in an effort to reap the populist vote.

It’s important to remember there are sensible alternatives to what the Albanese government is proposing.

In itself, the idea of more regulation of international students is not bad. There are good reasons to be concerned about the impact of the rapid growth in their numbers high numbers, and there are real issues with the high proportion of international students at many Australian universities.

These issues should be discussed and dealt with in a proportionate way. What the Albanese government has done is far from it and the consequences are serious.