The Inside Word

What is Australia’s future made of?

Not as many international students at universities, TAFEs and private vocational colleges – that’s for certain.

In response to intense political and community pressure over the spiralling housing crisis, the Albanese Government has decided it will reduce the number of international students coming to Australia. 

Labor aims to slash Net Overseas Migration (NOM) from 528,000 last year to 260,000 next year. International students make up a large share of NOM (around 42%) and are expected to make up a large part of the cut in migration numbers.  

The Government will deliver this through a range of tighter visa restrictions and much needed reforms to stop the gaming of the system that has been going on by some international students, education and migration agents. 

This is a dramatic shift in policy from only a year or so ago, when growing our international education market was a high priority for governments across the country. 

Ranked as the 5th highest Australian export sector, international education contributed around $36.4 billion to the economy in 2022/23.  After sharp falls during Covid, the massive uplift in students coming to Australia has surprised most – and now exceeds pre-Covid numbers by almost 12 per cent. We now have over 740,000 international students enrolled in Australia up from 663,000 in 2020. 

We all benefit from the contribution international students make to economic consumption, workforce supply and future human capital.  But the struggle to provide affordable housing for hundreds of thousands of Australian citizens along with the extra pressure of accommodating international students, has tipped the political scale.  Immediate social imperative has outweighed economic gain – at least for now. 

So, here’s the bitter pill.  

2021 and 2022 saw international enrolments decimated due to the Covid. 2024 and 2025 will again see enrolments slashed – this time due to political decisions.  

What businesses want most from governments is certainty, so they can plan and respond methodically to the markets in which they operate. Political risk used to be a very low consideration for business and investment decisions in Australia – that’s not the case any longer. 

Universities, TAFEs and private vocational colleges will bear the initial brunt of the cuts with fewer new student enrolments, a steep drop in revenue, the flow-on impact to teachers, and potentially will create stranded educational assets no longer in demand.  

Next will be tens of thousands of cafes and restaurants, retail stores and ride share companies, etc., that rely on international students working casually, whilst studying, to make up their workforce.  Many of these businesses, which managed to survive Covid, will feel new workforce shortage pain. 

And then we will see in three to five years, tens of thousands fewer graduating international students.  A significant number of these students would have chosen to remain in Australia post-graduation and those skills will have been needed for jobs in health, resources, energy, R&D, and even in advanced manufacturing to underpin the Future Made in Australia plans. 

All-in-all, it is a very tough decision the Federal Government has made.  

The Government fully appreciates the importance of the international education market to Australia in the short and long term.  It is doing a great job improving quality and integrity measures across the higher education sector.  However, the decision to cut the international student market will cause widespread pain. 

But, along with cost-of-living pressures, the housing crisis will have a meaningful impact on the upcoming elections (State and Federal) – so governments are reacting. All governments are now playing catch-up to the massive housing crisis, after years of relative inaction. There will be a lot of votes in it for parties whose policies voters think will be helpful – and the opposite will also hold true.

Whether or not the Government will get the balance right we will have to wait and see. It might come down to whether the 220,000 Australians currently coach surfing while trying to find accommodation get some much-needed reprieve.  

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