International student numbers not easy to cut without dire results

The Albanese government’s plan to cut international student numbers to mitigate the housing crisis has universities and business warning the move will drive up student fees, undermine institutional reputations, cripple research, and have a broad economic impact.

With proposed legislation to cap student intakes to be debated in parliament this week, the Herald’s Daniella White has revealed Australian universities are bracing for a $1.1 billion revenue black hole next year with 63,500 fewer international students expected. Economic modelling commissioned by the University of Sydney showed the cuts could cause a $4.1 billion hit to the Australian economy and cause 21,922 direct and indirect job losses in 2025.

The university has told Canberra that international students cross-subsidise the teaching of domestic students and noted in its submission that “for every full-time Australian citizen who studies medicine or veterinary science, the University of Sydney needs to find more than $10,000 in additional funding each year – funding sourced largely from international student fees.”

Meanwhile, Business Council of Australia’s chief executive Bran Black weighed in, saying international students were a “red herring” in the housing affordability debate. “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,” Black said. The BCA believes the supermarket chain Woolworths’ workforce reflects the pivotal role international students play in our economy: 5700 of its 200,000 employees are student visa holders, helping to “make sure the supermarket shelves are stocked and supply chains can operate efficiently”.

The overseas student overload has partly resulted from Australia’s universities being forced to mainline on overseas students after government cutbacks compelled economies on the tertiary sector. According to the federal Department of Education, international education was worth $36.4 billion to the Australian economy in 2022–23: $21.8 billion was spent on goods and services, and $14.6 billion was paid on tuition fees. The overseas student education industry trails only iron ore, coal and natural gas as an export.

A third of all international students are currently enrolled at just five institutions, including the University of Sydney, University of Melbourne, and University of NSW. Clearly, they saw the writing on the wall and chased new markets. Now, other institutions want the legislation to ensure the honey pot is divided up outside the sandstone universities crowd.

Whatever the truth about public funding for university teaching and research, any underfunding was outweighed by the doubling in international student income in the past decade or so to more than $8 billion a year. Some of that money has funded capital works and salaries – many Australian vice chancellors are now paid double the salaries of their overseas counterparts.