Student crackdown will lead to lasting economic pain: business council

The government’s cap on foreign students could cripple Australia’s higher education sector and deliver a lasting blow to the economy, the business council has warned as parliament prepares to debate the controversial crackdown.

Business Council of Australia chief Bran Black said international students were being used as a “red herring” in the housing affordability debate. The BCA also said foreign students were a crucial part of the workforce, citing the reliance that Australia’s largest employer, Woolworths, had on the visa holders.

BCA chief executive Bran Black says foreign students are not to blame for the housing crisis.Credit: Oscar Colman

“Our economy is grinding to a halt, and we are concerned the government is about to make the wrong short-term decision by cutting international students, which will have a lasting long-term negative hit to the economy, impacting all Australians,” said Black, who leads the lobby group representing the nation’s major companies.

“International students are the red herring of the housing debate, masking the real discussion on how we approve and build more homes, particularly in addressing state and territory planning bottlenecks.”

The government and the opposition have linked the post-pandemic surge of international students to housing stress. Both have pledged to enforce caps on the tertiary sector, the nation’s fourth-biggest export, as a key lever to drive down temporary migration, which the government aims to halve by next July from a high of 528,000 in 2022-23.

The Coalition used question time on Tuesday to continue its attack on the Albanese government over migration and housing, accusing it of presiding over lagging supply while net overseas migration reached nearly a million people over the past two financial years.

In response, Prime Minister Anthony Albanese said the government had launched a $32 billion plan to build 1.2 million homes by mid-2029, and legislated the Housing Australia Future Fund, which aims to invest in the construction of 30,000 social and affordable homes.

Universities and state governments have warned student caps will have broad economic impacts, inflict reputational damage on the nation as a study destination, and cripple domestic research and critical skills development while scapegoating students as a cause of the housing crisis.

On Monday, the government created further sector outrage by more than doubling student visa application fees to $1600, which Home Affairs Minister Clare O’Neil said would “create a migration system which is fairer, smaller and better”.

In its submission to the government’s proposed student caps, which are expected to be debated in parliament this week, the business council said the housing crisis had many causes apart from international student numbers.

“Poor regulation, failed planning, skills shortages in construction and high building costs have reduced new housing in the market,” the submission reads.

“Short-term policy reactions such as a cap on international students will not fix this issue, will detract from real solutions and have negative consequences for the broader economy.”

In a case study accompanying the submission, the business council says supermarket chain Woolworths counts 5,700 student visa holders among its 200,000 employees, helping to “make sure the supermarket shelves are stocked and supply chains can operate efficiently”.

The business council’s submission makes several recommendations, including scrapping the caps altogether, or giving universities a 5 per cent buffer to exceed foreign student limits and a two-strike warning before suspending providers.

“As currently drafted, the bill is a blunt instrument that … could irreparably damage our fourth-largest export sector,” the submission reads.

Education Minister Jason Clare said of the caps: “We are consulting on this right now and I want to continue to work with stakeholders.”

A parliamentary inquiry is also being undertaken into the bill, with the Department of Home Affairs warning the Commonwealth could not manage caps placed on foreign students without “significant” development.

The Australian Skills Quality Authority, which regulates vocational education and training colleges, says in its own submission the Department of Education’s data system needs to be able to manage provider caps in real-time and that it would be “very inefficient” if the skills quality authority was required to manually monitor the caps.

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